I came along two questions on a mock that I am having trouble with.
DBP for 2015 - $000s
Company’s contributions 3,500
Current service cost 700
Pas service cost 420
Discount rate to estimate liabilities 3.5%
Benefit Obligation at Beg of year 147,000
Benefit Obligation at End of year 146,020
Actuarial loss 1,610
Plan assets at beg of year 136,500
Plan assets at end of year 135,450
Actual return on plan assets 5,140
Expected rate of return on plan assets 4%
Question 13: The retirement benefits, in thousands, paid during the year were closest to:
A. 8,435
B. 8,855
C. 9,590
The answer is B.
I understand that one of the ways to get benefits paid (and the way the solution shows it) is by taking Beg. PBO + service costs + interest expense -/+ G/L on actuarial changes - End. PBO, However, I was using another formula: Beg. P.A. + Contributions + Actual Return - End. P.A. but I could not get the right answer. Shouldn’t both formulas yield the same result since we are solving for the same thing?
Question 14: Assuming a tax rate of 25%, the amount, in thousands, by which contribution exceeds total pension cost is closest to:
A. 1,785
B. 2,100
C. 2,310
The answer is A.
I was using the formula: TPPC = Contributions - Change in F.S. and then subtracting taxes from the result. This does not give me the right answer. Anyone get how to solve this?
Any help would be much appreciated!
Thank you.