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1. On January 1, 2010, Cyber Company established a defined benefit pension plan covering all employees. Data pertains to Cyber's defined benefit pension plan at December 31, 2010 was as follows. Fair value of pension plan assets Projected benefit obligation Net periodic pension cost Contribution made to the pension plan $700,000 900,000 680,00 600,000 In its December 31, 2010 statement of stockholders' equity, what amount should Cyber report as accumulated other comprehensive income for pension liabilities before tax effects? O $200,000 O $150,000 O $100,000 $50,000
2. On January 1, 2010, Cyber Company established a noncontributory defined benefit plan covering all employees and contributed $200,000 to the plan. At December 31, 2010, Cyber determined that the 2010 service and interest costs on the plan were $64,000. The expected and the actual rate of return on plan assets for 2010 was 10% There are no other components of Cyber's pension expense. What amount should Cyber report in its December 31, 2010 income statement the net periodic pension cost? O $200,000 O $84,000 O $64,000 $44,000
3. Cyber Company amended its defined benefit pension plan, granting a total credit of $200,000 to five employees for services rendered prior to the plan's adoption. The employees, A, B, C, D, and E, are expected to retire from the company as follows: A will retire after five years B and C will retire after seven years D and E will retire after three years What is the amount of prior service cost amortization in the first year? $13,363 O $15,000 0 $20,000 $40,000
1 Answer is $ 150000
To calculate accumulated other comprehensive income for pension liabilities before tax effects, we will take the difference between PBO and F.V. of pension plan assets
i.e. estimated gain = $900000-$700000 = $200000
Now we will reduce estimated gain by the pension expense ($650000-$600000 =$50000)
Therefore accumulated other comprehensive income =
$200000-$50000 = $150000 Answer
2. $64,000
Amount contributed to the plan will be reported in companys balance sheet whereas the interest costs shall be reported in income statement of the company.
3.
| Number of service years | 25 | =5+7+7+3+3 |
| Amortization per service year | 8000 | =200000/25 |
| Number of service years in first year | 5 | |
| Amortization of prior service cost in first year | 40000 | =8000*5 |
| Option D $40,000 is correct |
