In: Accounting
Problem 20-2
Crane Company adopts acceptable accounting for its defined
benefit pension plan on January 1, 2016, with the following
beginning balances: plan assets $201,400; projected benefit
obligation $245,000. Other data relating to 3 years’ operation of
the plan are as follows.
2016 |
2017 |
2018 |
|||||||
Annual service cost | $15,800 | $19,400 | $26,100 | ||||||
Settlement rate and expected rate of return | 10 | % | 10 | % | 10 | % | |||
Actual return on plan assets | 18,000 | 22,150 | 24,000 | ||||||
Annual funding (contributions) | 15,800 | 40,000 | 47,500 | ||||||
Benefits paid | 13,700 | 16,500 | 20,800 | ||||||
Prior service cost (plan amended, 1/1/17) | 160,000 | ||||||||
Amortization of prior service cost | 53,800 | 41,700 | |||||||
Change in actuarial assumptions
establishes a December 31, 2018, projected benefit obligation of: |
522,200 |
Prepare a pension worksheet presenting all 3 years’ pension balances and activities
Changes in the present value of the defined obligation are as follows: | |||
Particulars | 2016 | 2017 | 2018 |
Opening defined benefit obligation | 2,45,000.00 | 2,73,740.00 | 5,19,184.00 |
Current service cost | 15,800.00 | 19,400.00 | 26,100.00 |
Past service cost | - | 1,60,000.00 | - |
Interest cost (Assume rate 10%) | 24,500.00 | 27,374.00 | 51,918.40 |
Benefits paid | -13,700.00 | -16,500.00 | -20,800.00 |
Amortization of Prior Setvice cost | - | 53,800.00 | 41,700.00 |
Actuarial (gains) / loss on obligation | 2,140.00 | 1,370.00 | 5,735.00 |
Closing defined benefit obligation | 2,73,740 | 5,19,184 | 6,23,837 |
Actuarial (gains) / loss on obligation COMPUTATON | |||
Particulars | 2016 | 2017 | 2018 |
Expected return | 20,140.00 | 23,520.00 | 29,735.00 |
Actual return | 18,000.00 | 22,150.00 | 24,000.00 |
Actuarial (gains) / loss on obligation | 2,140.00 | 1,370.00 | 5,735.00 |
Computation of CHANGE IN PLAN ASSET | |||
Particulars | 2016 | 2017 | 2018 |
Beginning balances | 2,01,400.00 | 2,35,200.00 | 2,97,350.00 |
Annual return | 18,000.00 | 22,150.00 | 24,000.00 |
Annual Funding (Contributions) | 15,800.00 | 40,000.00 | 47,500.00 |
Closing balances | 2,35,200.00 | 2,97,350.00 | 3,68,850.00 |