Panther Company currently sponsors a defined benefit pension plan for its employees. At the end of 2019, the plan had a projected benefit obligation of $1,456,000 and fair value of plan assets of $1,629,000. Panther recognized a net pension asset in its balance sheet of $173,000 at the end of 2019. Due to the plans overfunded position, Allison Costello, Panther’s CFO, is interested in finding out if it is possible to settle or curtail the plan. Specifically, she is interested in purchasing a portfolio of high-quality bonds that have principal and interest payment dates very similar
Help me with calculation for require 2, 3
Panther Company currently sponsors a defined benefit pension plan for its employees. At the end of 2019, the plan had a projected benefit obligation of $1,456,000 and fair value of plan assets of $1,629,000. Panther recognized a net pension asset in its balance sheet of $173,000 at the end of 2019. Due to the plans overfunded position, Allison Costello, Panther’s CFO, is interested in finding out if it is possible to settle or curtail the plan. Specifically, she is interested in purchasing a portfolio of high-quality bonds that have principal and interest payment dates very similar to the estimated dates pension benefits would be paid.
required:
- Can the company recognize a gain or loss if it settles its pension plan? What is the amount of the gain or loss?
- Can the company recognize a gain or loss if it curtails its pension plan? What is the amount of the gain or loss?
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