Question 1-12

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Question 1-12 . 2007 Information: On 12/31/2006, USF had a Pension Liability of $3,500,000, which was comprised of a $23,000,000 PBO and $19,500,000 of Plan Assets. During 2007, USF contributed $4,000,000 to their pension plan, and paid out $5,000,000 in benefits. They expected to earn a 10% return on their Plan Assets, but they actually earned 4%. The actuary has told them to use a 5% settlement rate for interest for 2007, and has estimated a $3,000,000 current service cost. There was a $2,100,000 Net Loss in their AOCI account related to prior year actual returns being less than expected. At the end of the year their actuary revises the discount rate down, resulting in a loss of $1,000,000. The average remaining service life of the current employees is 15 years. * 2008 Information: On January 1, USF decides to amend its pension plan in the current year, which results in an increase in the PBO of $3,000,000 related to prior service costs. The average remaining service of the affected employees is 5 years. USF again expects to earn a 10% return on their Plan Assets, and they assume a 4% settlement rate for interest in 2008. Plan Assets earn an actual return of 6%, and current service costs totaled $4,000,000. USF contributed $4,000,000 to the plan assets, and paid $3,000,000 in benefits to plan participants. At the end of the year their actuary revises the discount rate down again, resulting in another loss of $1,500,000. The average remaining service life of the current employees is now 10 years. What is the PBO balance at the end of 2007? What is the Plan Assets balance at the end of 2007? How would the PBO and Plan Assets be recorded on the 2007 balance sheet? What is the Pension Expense for 2007? What is the 2007 ending balance in the AOCI-G/L account? What is the 2007 ending balance in the AOCI-Prior Service Cost (P.S.C.) account?