Question

At the end of 2021, Havana contributed $670 thousand to the pension fund and benefit payments of $624 thousand were made to retirees. The expected rate of return on plan assets was 10%, and the actuary's discount rate is 8%. There were no changes in actuarial estimates and assumptions regarding the PBO.What is Havana's 2021 actual return on plan assets?

Answer 1

Actual return is = $530 thousand

Step-by-step explanation:

given data

pension fund = $670 thousand

benefit payments = $624 thousand

rate of return on assets = 10%

discount rate = 8%

solution

we take here benefit of pension plan as attach picture

so we assume here actual return is = x.

so we apply formula of Ending balance of plan assets that is

Ending balance of plan assets = Beginning balance of plan asset + Actual return + Cash Contributions - Retiree benefits .................................1

put here value and we get

$6,336 = $5,760 + x + $670 - $624

so x will be

x = $530

so Actual return is = $530 thousand