Question
In: Accounting
Part 1) Melanie Vail Corp. sponsors a defined benefit pension plan for its employees. On January...
Part 1) Melanie Vail Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances relate to this plan.
|
Plan assets |
$480,000 |
|
Projected benefit obligation |
625,000 |
|
Accumulated OCI (PSC) |
100,000 Dr. |
|
Accumulated OCI (Gain/Loss) |
85,000 Cr. |
As a result of the operation of the plan during 2017, the following additional data are provided by the actuary:
|
Service cost for 2017 |
$90,000 |
|
Settlement rate |
9% |
|
Actual return on plan assets in 2017 |
57,000 |
|
Expected return on plan assets |
10% |
|
Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions |
76,000 |
|
Contributions in 2017 |
99,000 |
|
Benefits paid retirees in 2017 |
85,000 |
|
Avg. remaining service life (all employees) |
12 years |
1) Please use the spreadsheet below to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss.
| Annual | Projected | ||||||||||||
| Pension | OCI—Prior | OCI— | Pension | Benefit | |||||||||
| Items | Expense | Cash | Service Cost | Gain/Loss | Asset/Liability | Obligation | Plan assets | ||||||
| Balance, Jan. 1, 2015 | |||||||||||||
| Service cost | |||||||||||||
| Interest cost | |||||||||||||
| Actual Return | |||||||||||||
| Expected Return | |||||||||||||
| Amortization of PSC | |||||||||||||
| Contributions | |||||||||||||
| Benefits | |||||||||||||
| Liability increase | |||||||||||||
| Journal entry for 2015 | |||||||||||||
| Accumulated OCI, Dec. 31, 2014 | |||||||||||||
| Balance, Dec. 31, 2015 | |||||||||||||
2) Prepare the journal entry using a spreadsheet to record pension expense in 2017. Please provide a one line explanation for the reason why the journal entry has been made. Thanks very much!
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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Teal Corp. sponsors a defined benefit pension plan for its
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Plan assets
$489,900
Projected benefit obligation
616,700
Pension asset/liability
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Accumulated OCI (PSC)
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As a result of the operation of the plan during 2020, the following
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Service cost
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Settlement rate, 9%
Actual return on plan assets
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Amortization of prior service cost
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Expected return on plan assets...
Teal Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the...
Teal Corp. sponsors a defined benefit pension plan for its
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Plan assets
$489,900
Projected benefit obligation
616,700
Pension asset/liability
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Accumulated OCI (PSC)
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Dr.
As a result of the operation of the plan during 2020, the following
additional data are provided by the actuary.
Service cost
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Settlement rate, 9%
Actual return on plan assets
57,100
Amortization of prior service cost
19,500
Expected return on plan assets...
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Plan assets
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Projected benefit obligation
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Pension asset/liability
139,000
Accumulated OCI (PSC)
99,800
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As a result of the operation of the plan during 2020, the following
additional data are provided by the actuary.
Service cost
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Plan assets (market-related value)
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Projected benefit obligation
652,000
Pension asset/liability
116,000
Cr.
Prior service cost
86,000
Net gain or loss (debit)
99,000
As a result of the operation of the plan during 2020, the actuary
provided the following additional data for 2020.
Service cost
$124,000
Settlement rate, 9%; expected return rate, 10%
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Plan assets (market-related value)
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Projected benefit obligation
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Pension asset/liability
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Prior service cost
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Service cost
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Actual return on plan assets
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Amortization of prior service cost
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Plan assets $498,300
Projected benefit obligation 614,700
Pension asset/liability 116,400
Accumulated OCI (PSC) 96,900 Dr.
As a result of the operation of the plan during 2017, the
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Service cost $92,500
Settlement rate, 9%
Actual return on plan assets 54,200
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Expected return on plan assets...
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Projected benefit obligation
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Pension asset/liability
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Accumulated OCI (PSC)
97,100
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additional data are provided by the actuary.
Service cost
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Settlement rate, 8%
Actual return on plan assets
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Expected return on plan assets...
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Projected benefit obligation 625,000
Accumulated OCI (PSC) 100,000 Dr.
Accumulated OCI (Gain/Loss) 85,000 Cr.
As a result of the operation of the plan during 2017, the
following additional data are provided by the actuary:
Service cost for 2017 $90,000
Settlement rate 9%
Actual return on plan assets in 2017 57,000
Expected return on plan assets...
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Projected benefit obligation 609,400
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