Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. abc ltd. initiated a one-person pension plan in ja

ABC Ltd. initiated a one-person pension plan in January 2012 that promises the employee a...

60.1K

Verified Solution

Question

Accounting

ABC Ltd. initiated a one-person pension plan in January 2012 that promises the employee a pension on retirement according to the following formula: pension benefit = 2.5% of final salary per year of service after the plan initiation. The employee began employment with ABC early in 2009 at age 33, and expects to retire at the end of 2035, the year in which he turns 60. His life expectancy at that time is 21 years. Assume that this employee earned an annual salary of $40,000 when he joined ABC, that his salary was expected to increase at a rate of 4% per year, and that this remains a reasonable assumption to date. ABC considers a discount rate of 6% to be appropriate. Please provide calculations

Required:

1) What is the employees expected final salary?

2) What amount of current service cost should ABC recognize in 2017 relative to this plan?

3) What is the amount of the accrued benefit obligation at December 31, 2017?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

Question 2-17 You want to maintain a pH = 7.0 for an enzyme-catalyzed reaction that will produce...

Mechanical Engineering
1.2K views

With respect to mechanical strength considerations what is the feasibility of joining extra hard temper brass...

Basic Math
1.2K views

suppose you want to determine the mean number of cans of soda drunk each month by...

Biology
1.2K views

6CO2 + 6H?O ? C6H12O6 +602The equation above indicates that inaddition to six glucose molecules,photosynthesis...

Geometry
1.2K views

blem 5 a Let u 9 1 6 6 and v 9 1 1 6...

Basic Math
1.2K views

Line a passes through 3 1 and 1 7 Line b passes through 2 3...

Calculus
1.2K views

A radio tower is located 350 feet from a building From a window in the...

Accounting
1.2K views

The liquidity premium on a US Treasury debt security is normally considered to be: a-4...

Accounting
1.2K views

Sales taxes collected by a retailer are recorded by: a. crediting sales taxes revenue b....

Accounting
1.2K views

65. In 2021, Susan (44 years old) is a highly successful architect and is covered...

Accounting
1.2K views

received a reduction in the outstanding bill from Louis Manufacturing Co, for a boat received...

Accounting
1.2K views

A plan of reorganization must be approved by a minimum of __________ the number and...