Comprehensive Pension Problem - Take Home Quiz – a 20 points bonus
The following information relate to the defined benefit pension plan of Lorentz Corp. as of 1/1/x1
Projected benefit obligation 1,655,000
Fair value of plan assets 1,513,500
Unrecognized prior service cost 221,600
Unrecognized net pension gain or (loss) (65,000)
Pension data for 20x1 and 20x2: 20x1 20x2
Service cost 88,000 99,000
Contributions to pension plan 120,000 125,000
Benefits paid to retirees 132,000 140,000
Actual return on pension plan assets 26,350 180,000
Amortization of prior service costs 53,000 42,000
Settlement interest rate 11% 11%
Expected rate of return on plan assets 10% 10%
Accumulated benefit obligation 12/31 1,620,000 1,850,000
Vested benefit obligation 12/31 1,200,000 1,500,000
Average remaining service lives of employees 12 years 14 years
1. Calculate the PBO at 12/31/x1 and 12/31/x2
20x1 20x2
Beginning balance 1,655,000
Service cost
Interest
Benefits paid to retirees
Ending balance
