Question

In: Accounting

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

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:

Prepare a spreadsheet to determine all the pension items for both 2019 and 2020.
Prepare the required journal entries for both 2019 and 2020.
Prepare a partial balance sheet and a partial income statement for both 2019 and 2020.
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.

Expert Solution

ekkarill92 answered 2 years ago

On January 1, 2019, a company's defined benefit pension plan had a projected benefit obligation (PBO)...

On January 1, 2019, a company's defined benefit pension plan had a projected benefit obligation (PBO) of $380,000. The fair value of its pension plan assets on January 1 was $350,000. During 2019, the company contributed $50,000 to the pension plan and paid pension benefits to retirees in the amount of $70,000. The settlement rate for the pension plan for 2019 was 12%. Service cost for the year was estimated to be $109,000. The expected rate of return on pension...

On January 1, 2020, Ivanhoe Company has the following defined benefit pension plan balances. Projected benefit...

On January 1, 2020, Ivanhoe Company has the following defined benefit pension plan balances. Projected benefit obligation $4,420,000 Fair value of plan assets 4,260,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $506,000 are created. Other data related to the pension plan are as follows. 2020 2021 Service cost $151,000 $176,000 Prior service cost amortization 0 92,000 Contributions (funding) to the plan...

On January 1, 2020, Sage Company has the following defined benefit pension plan balances. Projected benefit...

On January 1, 2020, Sage Company has the following defined benefit pension plan balances. Projected benefit obligation$4,571,000 Fair value of plan assets4,210,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $492,000 are created. Other data related to the pension plan are as follows. 2020 2021 Service cost $152,000 $179,000 Prior service cost amortization 0 89,000 Contributions (funding) to the plan 236,000 285,000...

On January 1, 2017, Larkspur Company has the following defined benefit pension plan balances. Projected benefit...

On January 1, 2017, Larkspur Company has the following defined benefit pension plan balances. Projected benefit obligation $4,571,000 Fair value of plan assets 4,210,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2018, the company amends its pension agreement so that prior service costs of $492,000 are created. Other data related to the pension plan are as follows. 2017 2018 Service cost $152,000 $179,000 Prior service cost amortization 0 89,000 Contributions (funding) to the plan...

On January 1, 2020, Tamarisk Company has the following defined benefit pension plan balances. Projected benefit...

On January 1, 2020, Tamarisk Company has the following defined benefit pension plan balances. Projected benefit obligation $4,460,000 Fair value of plan assets 4,150,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $503,000 are created. Other data related to the pension plan are as follows. 2020 2021 Service cost $150,000 $182,000 Prior service cost amortization 0 92,000 Contributions (funding) to the plan...

Novak Co. has the following defined benefit pension plan balances on January 1, 2020. Projected benefit...

Novak Co. has the following defined benefit pension plan balances on January 1, 2020. Projected benefit obligation 4555000 Fair value of plan assets 4555000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $599,000 are created. Other data related to the pension plan are: 2020 2021 Service cost 149,000 170,000 Prior service cost amortization 0 91,000 Contributions (funding) to the plan 201,000 183,000...

On January 1, 2017, Grouper Company has the following defined benefit pension plan balances. Projected benefit...

On January 1, 2017, Grouper Company has the following defined benefit pension plan balances. Projected benefit obligation $4,464,000 Fair value of plan assets 4,190,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2018, the company amends its pension agreement so that prior service costs of $504,000 are created. Other data related to the pension plan are as follows. 2017 2018 Service cost $148,000 $181,000 Prior service cost amortization 0 89,000 Contributions (funding) to the plan...

On January 1, 2020, Harrington Company has the following defined benefit pension plan balances. Projected benefit...

On January 1, 2020, Harrington Company has the following defined benefit pension plan balances. Projected benefit obligation $4,500,000 Fair value of plan assets 4,200,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $500,000 are created. Other data related to the pension plan are as follows. 2020 2021 Service cost $150,000 $180,000 Prior service cost amortization 0 90,000 Contributions (funding) to the plan...

On January 1, 2017, Blossom Company has the following defined benefit pension plan balances. Projected benefit...

On January 1, 2017, Blossom Company has the following defined benefit pension plan balances. Projected benefit obligation $4,517,000 Fair value of plan assets 4,250,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2018, the company amends its pension agreement so that prior service costs of $504,000 are created. Other data related to the pension plan are as follows. 2017 2018 Service cost $148,000 $180,000 Prior service cost amortization 0 92,000 Contributions (funding) to the plan...

On January 1, 2018, Derek Co.’s defined benefit pension plan had plan assets with a fair...

On January 1, 2018, Derek Co.’s defined benefit pension plan had plan assets with a fair value of $750,000, and a projected benefit obligation of $875,000. In addition: Actual and expected return on plan assets – 7% Interest cost – 9% Service costs - $24,000 Unamortized prior service cost - $120,000 Employer contributions to the plan - $45,000 Distributions to employees from the plan - $60,000 Unamortized prior service cost is being amortized over the expected remaining service lives of...