2. 3 points The following information pertains to Wareham Company s pension plan: Actuarial estimate of projected benefit obligation (PBO) at 1/1/Year 1 $10,000 Assumed discount rate

2. 3 points

The following information pertains to Wareham Company’s pension plan:

Actuarial estimate of projected benefit obligation (PBO) at 1/1/Year 1 $10,000

Assumed discount rate 4%

Service cost for Year 1 $2,400

Pension benefits paid during Year 1 $2,100

If no change in actuarial estimates occurred during Year 1, Wareham’s PBO at December 31, Year 1, is:

Work: 

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AC311—Marcus Doxey
Homework Assignment 3 – Pensions and Income Taxes
30 points
DUE Tuesday, October 8
th
, 2013 AT THE BEGINNING OF CLASS
NO LATE ASSIGNMENTS ACCEPTED
Required:
Complete the three problems on the following pages.
Notes and instructions:
Complete all questions by writing the answers in the spaces provided.
You may work with other people, but I recommend doing this on your own to make sure that you
understand what you are doing—these concepts are very important.
It is important that you try to figure this out on your own; therefore,
I will not answer any
questions that give away an answer
, but I am more than happy to help clarify concepts or
answer other questions about the topic and assignment.

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1.
3 points
On December 31, Year 1, Cohen Company established a noncontributory defined-benefit
pension plan covering all of its employees. On that date, Cohen contributed $45,000 to
the plan. No benefits were earned in Year 1. At December 31, Year 2, Cohen determined
that the present value of all benefits earned in Year 2 was $63,000. The expected and
actual return on plan assets for Year 2 was 8%. Cohen’s pension expense has no other
components other than those implied by the information above. What amount should
Cohen report in its December 31, Year 2, income statement as pension expense?
Work:
2.
3 points
The following information pertains to Wareham Company’s pension plan:
Actuarial estimate of projected benefit obligation (PBO) at 1/1/Year 1
$10,000
Assumed discount rate
4%
Service cost for Year 1
$2,400
Pension benefits paid during Year 1
$2,100
If no change in actuarial estimates occurred during Year 1, Wareham’s PBO at December
31, Year 1, is:
Work:

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