- CFA Exams
- CFA Level I Exam
- Study Session 5. Financial Reporting and Analysis (1)
- Reading 14. Employee Compensation: Post-Employment and Share-Based
- Subject 3. Analysis of Pension Plan Disclosures
CFA Practice Question
The following information pertains to Westminster Company's defined benefit pension plan for 2011:
Fair value of Plan Assets, 12/31 $500,000
Employer contributions $180,000
Benefits paid out $90,000
Fair value of Plan Assets, 1/1 $350,000
Fair value of Plan Assets, 12/31 $500,000
Employer contributions $180,000
Benefits paid out $90,000
What is Sunset's actual return on plan assets for the year ended 2011?
A. $150,000
B. $60,000
C. $240,000
Explanation: The computation is as follows:
Less: increase from contributions [180,000]
Add back: decrease from benefits paid 90,000
Actual Return: 60,000
Increase in fair value of plan $150,000
Less: increase from contributions [180,000]
Add back: decrease from benefits paid 90,000
Actual Return: 60,000
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