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Pension Problem ABC Company had the following: The company adopts a pension plan on January 1,...
Pension Problem
ABC Company had the following:
- The company adopts a pension plan on January 1, 2010. No retroactive benefits were granted to employees.
- The service cost for each year is 2010 $400,000; 2011 $420,000; 2012 $432,000.
- The projected benefit obligation at the beginning of each year is 2011 $400,000 and 2012 $840,000.
- The discount rate is 4%.
- The expected long-term rate of return on plan assets is 5% which is also equal to the actual rate of return.
- The Company adopts a policy of funding an amount equal to the pension expense and makes the payment to the funding agency at the end of each year.
- Plan assets are based on the amounts contributed each year, plus a return of 5% per year, less an assumed payment of $20,000 at the end of each year to retired employees (beginning in 2011).
To do:
- Calculate the pension expense for each year (show calculations) and give journal entry. Take note of fact #6 when creating your simple journal entry.
- If funding is $385,000 for 2010, $400,000 for 2011 and $415,000 for 2012, what is your journal entry?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Problem 20-2 Crane Company adopts acceptable accounting for its defined benefit pension plan on January 1,...
Problem 20-2
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2017
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$19,400
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Settlement rate and expected rate
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10
%
10
%
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22,150
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40,000
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2019
2020
2021
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10
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10
%
10
%
Actual return on plan assets
18,200
22,280
23,600
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47,600
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plan, which increase the projected benefit obligation by $44,000.
Service costs, and additional information regardingg the plan are
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Current Service cost is $221,000 for 2019 and $215,200 for
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2017
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