Question

Information for the Haswell Company pension plan in 2026 is as follows: - - Service cost is $65,000

- Settlement rate is 10%, expected rate of return is 10%
- Actual return on plan assets is $150,000
- There are no prior service costs to amortize
- Annual funding contribution is $90,000
- Benefits paid to retirees during the year are $70,000
- Average service life of all covered employees is 15 years
- The projected benefit obligation on January 1, 2026 was $1,100,000
- The value of plan assets on January 1, 2026 was $900,000
- The balance in Other Comprehensive Income- Gains/Losses is a $135,000 credit on December 31,2025.
What is the balance of plan assets on December 31, 2026?

Answer 1

To calculate the balance of plan assets on December 31, 2026, we need to consider various factors and transactions related to the pension plan for the year.

Step-by-step explanation:

To calculate the balance of plan assets on December 31, 2026, we need to consider the various factors and transactions related to the pension plan for the year.

Starting with the value of plan assets on January 1, 2026 ($900,000), we add the actual return on plan assets for the year ($150,000) and the annual funding contribution ($90,000). This gives us a total of $1,140,000.

Next, we subtract the benefits paid to retirees during the year ($70,000). This leaves us with a balance of plan assets on December 31, 2026, which is $1,070,000.