Question

On January 1, 2021, Parks Co. has the following balances: Projected benefit obligation $5,600,000 Fair value of plan assets 5,000,000 The settlement rate is 10%. Other data related to the pension plan for 2021 are: Service cost $320,000 Amortization of prior service costs 72,000 Contributions 360,000 Benefits paid 335,000 Actual return on plan assets 352,000 Amortization of net gain 24,000 The fair value of plan assets at December 31, 2021 is

Answer 1

$5,377,000

Step-by-step explanation:

As per the given question the solution of fair value of plan assets is provided below:-

Fair value of plan assets of Dec 31 = Fair value of plan assets on Jan 1 + Contribution + Actual Return on plan assets - Benefits paid

= $5,000,000 + $360,000 + $352,000 - $335,000

= $5,712,000 - $335,000

= $5,377,000

So, we have calculated the fair value of plan assets of Dec 31 by using the above formula.