Question
In: Accounting
Problem 17-5 Lincoln Industries adopted a defined benefit pension plan on March 19, 2017. The provisions...
Problem 17-5
Lincoln Industries adopted a defined benefit pension plan on March 19, 2017. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. A consulting firm, engaged as actuary, recommends 4% as the appropriate discount rate. The service cost is $125,000 for 2017 and $260,000 for 2018. Actual rate of return on plan assets is 10% in both 2017 and 2018. Year-end funding is $140,000 for 2017 and $150,000 for 2018. There were no plan amendments, changes in actuarial estimates, and assumptions regarding the PBO in 2017. On January 1, 2018, the company amended the pension formula and made the change retroactive, creating a prior service cost of $55,000. Amortization of prior service cost for 2018 is $2,500. No retiree benefits were paid in 2017, but $15,000 was paid to retirees in 2018.
Required:
Prepare ALL necessary 2018 journal entries to record pension activity.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Problem 17-5 Lincoln Industries adopted a defined benefit pension plan on March 19, 2017. The provisions...
Problem 17-5
Lincoln Industries adopted a defined benefit pension plan on
March 19, 2017. The provisions of the plan were not made
retroactive to prior years. A local bank, engaged as trustee for
the plan assets, expects plan assets to earn a 10% rate of return.
A consulting firm, engaged as actuary, recommends 4% as the
appropriate discount rate. The service cost is $125,000 for 2017
and $260,000 for 2018. Actual rate of return on plan assets is 10%
in...
Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2018. The provisions of the...
Stanley-Morgan Industries adopted a defined benefit pension plan
on April 12, 2018. The provisions of the plan were not made
retroactive to prior years. A local bank, engaged as trustee for
the plan assets, expects plan assets to earn a 10% rate of return.
The actual return was also 10% in 2018 and 2019.* A consulting
firm, engaged as actuary, recommends 5% as the appropriate discount
rate. The service cost is $200,000 for 2018 and $290,000 for 2019.
Year-end funding...
Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2018. The provisions of the...
Stanley-Morgan
Industries adopted a defined benefit pension plan on April 12,
2018. The provisions of the plan were not made retroactive to prior
years. A local bank, engaged as trustee for the plan assets,
expects plan assets to earn a 10% rate of return. The actual return
was also 10% in 2018 and 2019.* A consulting firm, engaged as
actuary, recommends 6% as the appropriate discount rate. The
service cost is $150,000 for 2018 and $240,000 for 2019. Year-end
funding...
Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2021. The provisions of the...
Stanley-Morgan Industries adopted a defined benefit pension plan
on April 12, 2021. The provisions of the plan were not made
retroactive to prior years. A local bank, engaged as trustee for
the plan assets, expects plan assets to earn a 10% rate of return.
The actual return was also 10% in 2021 and 2022.* A consulting
firm, engaged as actuary, recommends 5% as the appropriate discount
rate. The service cost is $160,000 for 2021 and $250,000 for 2022.
Year-end funding...
Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2018. The provisions of the...
Stanley-Morgan Industries adopted a defined benefit pension plan
on April 12, 2018. The provisions of the plan were not made
retroactive to prior years. A local bank, engaged as trustee for
the plan assets, expects plan assets to earn a 10% rate of return.
A consulting firm, engaged as actuary, recommends 5% as the
appropriate discount rate. The service cost is $220,000 for 2018
and $310,000 for 2019. Year-end funding is $230,000 for 2018 and
$240,000 for 2019. No assumptions...
Dell Company adopted a defined benefit pension plan on January 1, 2017. Dell amortizes the initial...
Dell Company adopted a defined benefit pension plan on January
1, 2017. Dell amortizes the initial prior service cost of
$1,334,400 over 16 years. It assumes a 7% discount rate and an 8%
expected rate of return. The following additional data are
available for 2017:
Service cost for 2017
$
320,000
Prior service cost amortization
83,400
Employer contribution made at 12/31/2017
335,000
Compute the pension asset (liability) to be reported on Dell’s
December 31, 2017, balance sheet. (A net pension...
Ellen Industries has a defined benefit pension plan. At December 31, 2017, Ellen received the following...
Ellen Industries has a defined benefit pension plan. At December
31, 2017, Ellen received the following information:
($ in 000s)
2017
2018
Beginning Balance
Beginning Balance
PBO
(360)
(429)
Plan Assets
240
300
Prior Service Cost - AOCI or OCI
200
165
Accum. Benefit Oblig.(ABO)
(300)
(360)
Net Loss-AOCI
100.6
100
At the end of 2017, Ellen contributed $60 thousand to the
pension fund and benefit payments of $27 thousand were made to
retirees. The expected rate of return on...
What is the difference between a Defined Benefit Pension Plan and a Defined Contribution Pension Plan.?...
What is the difference between a Defined Benefit Pension Plan
and a Defined Contribution Pension Plan.? Why have Defined
Contribution Plans become more popular? Froman employees
perspective, which one do you think is more attractive?
On January 1, 2019, Parkway Company adopted a defined benefit pension plan. At that time, Parkway...
On January 1, 2019, Parkway Company adopted a defined benefit
pension plan. At that time, Parkway awarded retroactive benefits to
its employees, resulting in a prior service cost of $2,180,000 on
that date (which it did not fund). Parkway decided to amortize this
cost by the straight-line method over the 16-year average remaining
service life of its active participating employees. Parkway’s
actuary and funding agency have also provided the following
additional information for 2019 and 2020:
2019
2020
Service cost...
On January 1, 2019, Baznik Company adopted a defined benefit pension plan. At that time, Baznik...
On January 1, 2019, Baznik Company adopted a defined benefit
pension plan. At that time, Baznik awarded retroactive benefits to
certain employees. These retroactive benefits resulted in a prior
service cost of $1,200,000 on that date (which it did not fund).
Baznik has six participating employees who are expected to receive
the retroactive benefits. Following is a schedule that identifies
the participating employees and their expected years of future
service as of January 1, 2019:
Employee
Expected Years of Future...
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