Thursday, June 17, 2021

For Castor Corporation, year-end plan assets were $1,750,000. At the beginning of the year, plan assets were $1,350,000

For Castor Corporation, year-end plan assets were $1,750,000. At the beginning of the year, plan assets were $1,350,000. During the year, contributions to the pension fund were $170,000, while benefits paid were $140,000.

Calculate Castor’s actual return on plan assets.


Ending plan assets                              $1,750,000    
Beginning plan assets                            1,350,000   
Increase in plan assets                            400,000
Deduct:  Contributions              $170,000                      
        Less: benefits paid        (140,000    (30,000 )
Actual return on plan assets                    $ 370,000    



Refer to the information for Cotter Corp. in BE19–3, and provide a continuity schedule for the plan assets for the year. Is the plan overfunded or underfunded?
In BE Cotter Corp. reports the following information (in hundreds of thousands of dollars) to you about its defined benefit pension plan for 2011:
Actual return on plan assets ………………………………   11
Current service cost ……………………………………..  21
Benefits paid to retirees …………………………………   8
Interest cost ……………………………………………..    9
Contributions from employer …………………………… 20
Opening balance, accrued benefit obligation (ABO) …… 92
Cost of plan amendment in year …………………………   13
Opening balance, fund assets ……………………………   100
Provide a continuity schedule for the ABO for the year.


Fund assets, opening balance                          $100
Actual return on assets                                 11
Contributions from employer                             20
Benefits paid to retirees                               (8 )
Fund assets, ending balance                           $123


Accrued benefit obligation (BE 19-3)                 $(127 )
Plan assets at fair value                              123
Plan’s funded status                                (4 )

Since the accrued benefit obligation exceeds the plan assets, the plan is underfunded. 

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