Assume that a company establishes a DB pension plan. The employee has a salary in...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Assume that a company establishes a DB pension plan. The employee has a salary in the coming year of $50,000 and is expected to work for 3 more years before retiring. The assumed discount rate is 10%, and the assumed annual compensation increase is 4%
Current salary $50,000
Years until retirement 3
Annual compensation increases 4%
Discount rate 10%
Final years estimated salary $50,000*(1.04)2= $54,080
Benefit 2%
The plan will pay a lump sum pension benefit equal to 2% of the employees final salary for each year of service beyond the date of establishment.
Construct the pension table. Use the format below.
The Pension Table
| Year | 1 | 2 | 3 |
| Estimated annual salary |
|
|
|
| Benefits attributed to: |
|
|
|
| Prior years |
|
|
|
| Current year |
|
|
|
| Total benefit |
|
|
|
|
|
|
|
|
| Opening Obligation |
|
|
|
| Interest (10%) |
|
|
|
| Current service cost |
|
|
|
| Closing Obligation |
|
|
|
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!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.