Problem:
Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2013. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. A consulting firm, engaged as actuary, recommends 5% as the appropriate discount rate. The service cost is $240,000 for 2013 and $330,000 for 2014. Year-end funding is $250,000 for 2013 and $260,000 for 2014. No assumptions or estimates were revised during 2013.
Required:
Question: Calculate each of the following amounts as of both December 31, 2013, and December 31, 2014
- Projected benefit obligation
- Plan assets
- Pension expense
- Net pension asset or net pension liabilty
Note: Be sure to show how you arrived at your answer.