Question

Kamphor Co. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2021:

                                                                                     January 1, 2021    December 31, 2021

         Projected benefit obligation                                  $2,500,000                $2,755,000

         Fair value of plan assets                                         1,250,000                  1,750,000

         Accumulated OCI – (PSC)                                     540,000                    300,000

Service cost for 2021 is $180,000 and amortization of prior service cost is $240,000. The company's funding contribution to the plan in 2021 amounted to $525,000. The expected return on plan assets and the settlement rate were both 8%. What is pension expense for 2021?

Select one:

$520,000

$620,000

$720,000

($5,000)

Service cost component for 2021 is $180,000 and amortization of prior service cost is $240,000. The company's funding contribution to the plan in 2021 amounted to $525,000. The expected return on plan assets and the settlement rate were both 8%. Which of the following increased the Pension Benefit Obligation for 2021?

Select one:

Amortization of Service Cost

Service Cost

Expected Return on Assets

Funding

Service cost for 2021 is $180,000 and amortization of prior service cost is $240,000. The company's actual funding of the plan in 2021 amounted to $525,000. The expected return on plan assets and the settlement rate were both 8%. The journal entry to record pension expense for the period will include

Select one:

a debit to Cash for $525,000.

a debit to Pension Asset/ Liability for $5,000.

a debit to Pension Asset/ Liability for $245,000.

a credit to Investment Income for $100,000.

Service cost component for 2021 is $180,000 and amortization of prior service cost is $240,000. The company's actual funding of the plan in 2021 amounted to $525,000. The expected return on plan assets and the settlement rate were both 8%. What other piece of information would be required to complete a pension worksheet for Kamphor Co.?

Select one:

the remaining service lives of employees

the cost of capital

the increase or decrease in Pension Asset/ Liability

the cash payments to beneficiaries

Answer 1

		Year 2021
1)	Pension Expense	$    520,000.00
3)	Journal entry
	Account title & Explaination	2021
	Debit	Credit
	Annual pension expense	$          520,000
	OCI-Prior Service Cost		$       240,000
	OCI-(Gain/Loss)	$                     -
	Cash		$       525,000
	Net Pension Asset/liability	$          245,000
	(To record pension expense and remeasurement loss recorded)

2) Service Cost increased the Pension Benefit Obligation for 2021.

3) The journal entry to record pension expense for the period will include Debit to Pension asset/ liability $245,000

4) Cash payments to beneficiaries is required to complete the Pension worksheet.

Pension Worksheet 2021
Items	Annual Pension Expense	Cash		OCI-Prior Service Cost	OCI-Gain/(Loss)	Pension Asset/liability	Projected benefit obligation	Plan Asset
Balance, Jan 1,2021	$                     -	$                   -		$     540,000	$                     -	$ (1,250,000)	$          (2,500,000)	$           1,250,000
Past Service Cost created	$                     -	$                   -		$                 -	$                     -	$                    -	$                            -	$                          -
Service Cost	$          180,000	$                   -			$                     -	$                    -	$              (180,000)	$                          -
Interest Cost	$          200,000	$                   -			$                     -	$                    -	$              (200,000)	$                          -
Actual return	$       (100,000)	$                   -			$                     -	$                    -	$                            -	$               100,000
Unexpected gain/ loss	$                     -	$                   -			$                     -	$                    -	$                            -	$                          -
Amortisation of PSC	$          240,000	$                   -		$   (240,000)	$                     -	$                    -	$                            -
Amortisation of OCI-Gain/loss	$                     -	$                   -		$                 -	$                     -	$                    -	$                            -
Liability (increases)/decreases	$                     -	$                   -				$                    -	$                            -
Contributions	$                     -	$     (525,000)			$                     -	$                    -	$                            -	$               525,000
Benefits	$                     -	$                   -			$                     -	$                    -	$                125,000	$            (125,000)
	$                     -	$                   -			$                     -	$                    -	$                            -	$                          -
Journal entry for 2021	$          520,000	$     (525,000)		$   (240,000)	$                     -	$        245,000	$              (255,000)	$               500,000
Accumulated OCI dec 31, 2020	$                     -	$                   -		$     540,000	$                     -	$                    -	$                            -	$                          -
Balance, December 31, 2021	$                     -	$                   -		$     300,000	$                     -	$ (1,005,000)	$          (2,755,000)	$           1,750,000
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