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Basic Question 17 of 17
Pinehurst Corporation has a qualified defined benefit plan in which they annually fund the net pension expense within two months of year-end. The following information is available at 12/31/2011:
Net pension expense for 2011: 300,000.
Unrecognized prior service cost (12/31) 150,000.
Accumulated benefit obligation (12/31) 560,000.
Fair value of plan assets (12/31) $600,000
Net pension expense for 2011: 300,000.
Unrecognized prior service cost (12/31) 150,000.
Accumulated benefit obligation (12/31) 560,000.
How much should appear on Pinehurst's 12/31/2011 balance sheet as a pension liability?
User Contributed Comments 3
| User | Comment |
|---|---|
| PaulChia | whay does unrecognized prior service cost not affect the pension liability? Is this not amortized? |
| ngeorge | Since they have been funding the pension expense every year, the prior Prepaid Pension Cost is $0. For 2011, they apparently didn't fund (not clearly described) so the prepaid is the $300k pension expense. Unrecognized prior service cost is already included in net pension expense so that is just extra data. |
| CFAJ | thanks ngeorge |
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Learning Outcome Statements
explain and calculate how adjusting for items of pension and other post-employment benefits that are reported in the notes to the financial statements affects financial statements and ratios;
interpret pension plan note disclosures including cash flow related information;
CFA® 2025 Level II Curriculum, Volume 2, Module 11.