Question

Information regarding the defined-benefit pension plan of Glavin Industries included the following for 2016 ($ in millions):

Plan assets, January 1...$210
Retiree benefits paid (end of year)...$150
Actual return on plan assets...$30
Employer contributions to the pension plan (end of year)...$126
Expected rate of return on plan assets...10%

What was the amount of Glavin's plan assets at December 31, 2016?

A) $156 million
B) $207 million
C) $216 million
D) $516 million

Answer 1

Glavin's plan assets at December 31, 2016, were calculated to be $216 million. This total comes from adding the actual return and employer contributions to the beginning assets and then subtracting the retiree benefits paid.

Step-by-step explanation:

To calculate the amount of Glavin's plan assets at December 31, 2016, we need to consider the plan assets at the beginning of the year, the actual return on plan assets, the retiree benefits paid, and the employer contributions. We begin with the plan assets at the start of the year, which is $210 million. Throughout the year, the actual return on the plan assets is $30 million. By the end of the year, the retiree benefits paid amount to $150 million. Finally, the employer contributes $126 million to the pension plan by year's end.

Performing the calculation, we start with the initial plan assets of $210 million, add the return of $30 million, then subtract the benefits paid of $150 million, and add the employer contributions of $126 million.

The calculation is: $210 million + $30 million - $150 million + $126 million = $216 million

Therefore, the amount of Glavin's plan assets at December 31, 2016, is $216 million (Option C).