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Question 10BE

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Intermediate Accounting (Kieso)
Found in: Page 1162

Short Answer

Lahey Corp. has three defined benefit pension plans as follows. Pension Assets Projected Benefit (at Fair Value) Obligation Plan X $600,000 $500,000 Plan Y 900,000 720,000 Plan Z 550,000 700,000 How will Lahey report these multiple plans in its financial statements?

Financial statements are those prepared in each organization to determine the company's financial health and position in the competitive market.

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Step by Step Solution

Computation of pension assets/liability worksheet.

Plan

Pension assets (at fair value)

Projected benefit obligation

Pension assets/liability

Plan X

$600,000

$500,000

$100,000 (asset)

Plan Y

$900,000

$720,000

$180,000 (asset)

Plan Z

$550,000

$700,000

$150,000 (liability)

Reporting of multiple plans

Lahey will report these multiple plans as pension assets with an amount of $280,000 and the pension liability (Plan Z) with the amount of $150,000

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