FITNESS-FOR-ALL
F Y2026 ANALYSIS
Appendix IV - Defined Benefit Plan
On July 1, 2026, FFA implemented a defined benefit plan to entice its employees to stay for years
to come. To really encourage employees to stay, FFA ensured that the plan would be non-
contributory for all employees. In other words, only FFA would need to contribute, while the
employees would benefit from the amounts when they retire.
Stephanie deemed $230,000 to be suitable for past service costs. No contributions have been
made from FFA for current service costs, and $120,000 has been contributed from FFA for past
service costs.
The actuary has sent you further information concerning the pension plan.
Detail Amount
Current Service Cost $45,000
Contributions for Past Services $120,000
Expected Return on Plan Assets $15,000
Interest Expense on Accrued Benefit Obligation $10,000
Actual Value of Plan Assets (12/31/2026) $160,000
Actual Value of Accrued Benefit Obligation $310,000
(12/31/2026)
Given Justin had previously worked at small private companies, he was unsure how to account
for the pension expense. As such, the only entry was a debit of $120,000 to pension expense and
a credit of $120,000 to cash, as this was the amount contributed thus far.
