Kaa & Shere Khan Company has a non-contributory, definedbenefit pension plan. Kaa’s incremental borrowing rate is 7%. Theaccounting period ends 31 December 2016. Pension plan data to beused for accounting purposes in 2016 are as follows:
Fair value of plan assets, Dec 31,2015 $6,258,000
Defined benefit obligation, Dec 31,2015 $7,299,000
Actual return on plan assets for2016 $61,100
Actuarial revaluation dated Dec 31,2016 $(806,900)
(due to mortality assumptionchanges)
Funding payment at year end2016 $250,000
Benefits paid to retirees in2016 $105,000
Current service cost for2016 $233,400
Required:
- Calculate the net defined benefit pension liability as of Dec31, 2015.
- Calculate the net defined benefit pension liability as of Dec31, 2016 by calculating the defined benefit obligation and the fairvalue of plan assets as at Dec 31, 2016.
- A friend of yours is confused because she cannot find thepension assets or the accrued obligation on Kaa & Shere KhanCompany’s most recent financial statements. She asks you toexplain.
