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Zenith Company, a calendar-year entity, amends its defined benefit pension plan on January 1, 2019 and must recognize the increase in past service costs of its vested and non-vested employees as of that date in the calculation of its net 2019 pension expense (or revenue). The pertinent facts as of January 1, 2019 are:
Increase in Present Service Cost (PSC)-vested employees: $5,000
Increase in Present Service Cost (PSC)-non-vested employees: $2,000
Remaiining vesting period- non-vested employees: 5 years
Remaining working life-vested employees 10 years
Remaining working life-non-vested employees: 20 years
Required:
a. Calculate the past service cost included in the 2013 net pension expense (or revenue) under U.S. GAAP.

Respuesta :

adebayodeborah8

Answer:

net pension expense (or revenue) under U.S.GAAP is $600

Explanation:

the past service cost included in the 2013 net pension expense ( or revenue) under U.S. GAAP is calculated below;

past service cost = { ( increase PSC for vested employees)

                             (remaining working life of vested employees)

                                                        +

                              {( increase PSC for non-vested employee)}

                               ( remaining working life of non- vested employees)

past service cost = { $5000/10years) + ( $ 2000/20years)

past service cost = $500 + $100

past service cost =$600

Therefore the past service cost  included in the 2013 net pension expense (or revenue) under U.S.GAAP is $600

gbenewaeternity

Answer:

The past service cost included n the net pension is $600

Explanation:

Given Data;

Increase in present Service Cost (PSC)-vested employees = $5,000

Increase in present Service Cost (PSC)-non-vested employees= $2,000

Remaining vesting period- non-vested employees =5 years

Remaining working life-vested employees =10 years

Remaining working life-non-vested employees = 20 years

To calculate the past service cost in the net pension expense under U.S GAAP; we use the formula given as;

Past service cost =

[tex]\frac{Increase PSC for vested employee}{Remaining working life of vested employees} + \frac {Increase PSC for non-vested employee}{remaining working life of non-vested employees}[/tex]

Substituting into the equation, we have;

Past service cost = $5,000/10 + $2,000/20

                            =$500 + $100

                           = $600

The past service cost included n the net pension is $600

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