Changing Assumptions Ltd

question 65

Essay

Changing Assumptions Ltd. has the following details related to its defined benefit pension plan as at December 31,2013: Pension fund assets of $1,900,000 and Actuarial obligation of $1,806,317.
The actuarial obligation represents the present value of a single benefit payment of $3,200,000 that is due on December 31,2019,discounted at an interest rate of 10%; i.e.,$3,200,000 / 1.10⁶ = $1,806,317.
The pension has no unamortized experience gains or losses,and no past service costs at the end of 2013. Funding during 2014 was $55,000. The actual value of pension fund assets at the end of 2014 was $2,171,000. As a result of the current services received from employees,the single payment due on December 31,2019 had increased from $3,200,000 to $3,380,000.
Required:
a. Compute the current service cost for 2014 and the amount of the accrued benefit obligation at December 31,2014. Perform this computation for interest rates of 8%,10%,and 12%.
b. Derive the pension expense for 2014 under various assumptions about the expected return and discount rate. Complete the following table:
c. Briefly comment on the different amounts of pension expense in relation to the assumptions for expected return and discount rate. How does a change in the discount rate affect the accrued benefit obligation?

Comprehend the concept of microcultural differences and how they affect international business practices.

Understand the evolution of organizational definitions in the context of globalization.

Recognize cultural orientations (collectivism, individualism, masculinity, femininity) and their impact on business and management practices.

Appreciate the importance of managing diversity within organizations to remain competitive.

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Definitions:

Black and/or Latino Urban Youngsters

Refers to young individuals of African American or Hispanic origin living in urban areas.

Immigrant Groups

Communities formed by people who have moved from one country to another, often sharing a common national or cultural identity.

People of Color

A term used to describe individuals of non-white racial or ethnic backgrounds, emphasizing diversity and the experiences of racial discrimination.

Termination and Relocation

Policies or practices related to ending programs, services, or statuses, and moving individuals, often forcibly, from one location to another.