Question

For each of the following independent events listed below for Year 1, determine the effect on the indicated items (i.e., pension expense, projected benefit obligation, and plan assets).

Enter the appropriate amounts in the designated cells below. Round all amounts to the nearest whole number. Indicate an increase in the relevant item as positive numbers and a decrease as negative numbers using a leading minus (-) sign. When there is no effect, enter a zero (0).

EVENT	ITEM	ITEM	ITEM
Year 1	Pension Expense in Year 1	Projected Benefit Obligation (PBO)	Plan Assets
(1) On December 31, Year 1, the company amended its defined benefit pension plan for an additional $200,000 in pension benefits to the employees for the services they rendered in the previous years.
(2) Service cost of $300,000 was recognized in Year 1.
(3) Pension benefits of $50,000 were paid on December 31, Year 1.
(4) The annual contribution to the defined pension benefit plan of $330,000 was done by the company on December 31, Year 1.
(5) On January 1, Year 1, the fair value of plan assets was $500,000 and the company expected 8% return on plan assets in Year 1. On December 31, Year 1, the fair value of plan assets was $530,000. No benefit payments or contributions were made in Year 1. The company applies the corridor method for pension asset and liability gains or losses.
(6) On January 1, Year 1, the PBO and plan assets balances were, $450,000 and $350,000, respectively. The assumed discount rate that reflects the rate at which benefits can be settled was 10%.

Answer 1

EVENT	ITEM	ITEM	ITEM
Year 1	Pension Expense in Year 1	Projected Benefit Obligation (PBO)	Plan Assets
(1) On December 31, Year 1, the company amended its defined benefit pension plan for an additional $200,000 in pension benefits to the employees for the services they rendered in the previous years.	+200,000
(2) Service cost of $300,000 was recognized in Year 1.		-300,000
(3) Pension benefits of $50,000 were paid on December 31, Year 1.		0
(4) The annual contribution to the defined pension benefit plan of $330,000 was done by the company on December 31, Year 1.		+330,000
(5) On January 1, Year 1, the fair value of plan assets was $500,000 and the company expected 8% return on plan assets in Year 1. On December 31, Year 1, the fair value of plan assets was $530,000. No benefit payments or contributions were made in Year 1. The company applies the corridor method for pension asset and liability gains or losses.			-10,000
(6) On January 1, Year 1, the PBO and plan assets balances were, $450,000 and $350,000, respectively. The assumed discount rate that reflects the rate at which benefits can be settled was 10%.		-40909	-31818