Rosek Inc. provides the following information related to its post-retirement benefits for the year 2011:
Accrued post-retirement benefit obligation at Jan. 1, 2011………………$610,000
Plan assets, Jan. 1, 2011 ………………………………………………….. 42,000
Unrecognized net transitional loss, Jan. 1, 2011 ………………………… 568,000
Actual and expected return on plan assets, 2011 ……………………….. 3,000
Amortization of transition liability, 2011 ……………………………….. 35,000
Discount rate …………………………………………………………….. 10%
Service cost, 2011 ……………………………………………………….. 57,000
Plan funding during 2011 ……………………………………………….. 22,000
Payments from plan on behalf of retirees ……………………………… 6,000
Actuarial loss on accrued benefit obligation, 2011 (end of year) ……….. 88,000
The only unrecognized cost related to this plan at January 1, 2011, was the net transition loss. Rosek Corp. applies the deferral and amortization approach.
Instructions
(a) Calculate the post-retirement benefit expense for 2011.
(b) Determine the December 31, 2011 balance of the fund assets, the accrued obligation, and the funded status.
(c) Determine the balance of the accrued post-retirement benefit asset/liability account on the December 31, 2011 balance sheet.
(d) Reconcile the funded status with the amount reported on the balance sheet at December 31, 2011.
(a) Service cost $ 57,000
Interest on accrued post-retirement benefit
obligation (10% X $610,000) 61,000
Expected return on plan assets (3,000 )
Amortization of transition amount 35,000
Post-retirement benefit expense 2011 $150,000
(b) Plan assets, 1/1/11 $42,000
Actual return on assets 3,000
Contributions 22,000
Benefits paid out (6,000 )
Plan assets, 12/31/11 $61,000
Accrued post-retirement benefit obligation, 1/1/11 $610,000
Interest cost ($610,000 x 10%) 61,000
Service cost 57,000
Loss from change in actuarial predictions 88,000
Benefits paid out (6,000 )
Accrued ABO, 12/31/11 $810,000
Accrued ABO, 12/31/11 $(810,000 )
Plan assets at fair value 61,000
Accrued post-retirement benefit obligation in
excess of plan assets (funded status) $(749,000 )
(c) Accrued post-retirement benefit liability, 1/1/11 $ 0
Post-retirement benefit expense 2011 150,000
Contributions (funding) during 2011 (22,000 )
Accrued post-retirement benefit liability, 12/31/11 $128,000
(d) Funded status (from (b) above) $(749,000 )
Unrecognized net actuarial loss 88,000
Unrecognized transitional loss* 533,000
Accrued post-retirement benefit liability $(128,000 )
*$568,000 – $35,000 = $533,000
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