Question

NOELLA Consultants Inc. has had a defined benefit pension plan since January 1, 2014.

The following represents beginning balances as at January 1, 2019:

Market value of Plan Asset $2,008,900; Defined Benefit Obligation $2,340,000; AOCI: Gain of $65,000

Additional Information is as follows:

Current Service cost is $221,000 for 2019 and $215,200 for 2020.

Company Funding/Contribution is $200,400 for 2019 and $212,700 for 2020. Funding is made on December 31 of each year.

Actual return on assets is $115,600 for 2019 and $117,400 for 2020.

There are payments made to retired employees equal to $63,900 in 2019 and for $90,300 in 2020.

Increase in obligation of $123,500 due to Past service cost from plan amendment dated December 31, 2019.

There is an increase in obligation for $64,510 due to changes in Actuarial assumptions at Dec 31, 2020.

The discount/interest rate is 6% for both years.

Required:

1. Prepare a spreadsheet to determine all the pension items for both 2019 and 2020.
2. Prepare the required journal entries for both 2019 and 2020.
3. Prepare a partial balance sheet and a partial income statement for both 2019 and 2020.
4. Prepare the notes to the financial statements for 2019 only.

Note: You can use either the textbook approach or the alternative approach as we discussed in class.

Answer 1