Question

In: Accounting

Company A's pension plan had the following balances on January 1, 2012 Balances, Jan. 1, 2010...

Company A's pension plan had the following balances on January 1, 2012

Balances, Jan. 1, 2010

plan assets -$120,000

pension assets/liabilities-($22,000)

projected benefit obligation-($142,000)

accumulated OCI

(PSC)- $42,000

(G/L)- $18,000

In 2012, Company A adjusted the actuarial assumptions of the plan, which increase the projected benefit obligation by $44,000. Service costs, and additional information regardingg the plan are summarized below.

Pension Plan

service cost- 28,400

amortization of prior service cost-0

amended prior service costs-(80,000)

actual return on plan assets-40,000

contributions-82,000

benefits paid-64,200

Company A's expected return on plan assets is 10%, while their interest and settlement rate is 8%. The average remaining service life of Comapny A's employees was 8 years.

Instructions

1. Prepare a schedule to calculate amortization of the gain, or loss on other omprehensive income, if any using the corridor method.

2. Prepare a pension plan worksheet for 2012.

3. Prepare the journal entry to record pension plan expense in 2012.

***Please show all work and calculations for everything***

Thanks :)

Solutions

Expert Solution

Requirement 1

Amortisation of loss on OCI using Corridor method

Corridor Amortization $475 ($18,000-$142,000*10%)/8

Requirement 2

Company A
Pension Worksheet 2012
Items General Journal Entries Memo Record Entries
Annual Pension Expense Cash OCI-Prior Service Cost OCI-Gain/Loss Pension Asset/
Liability		 Projected Benefit Obligations Plan Assets
Balance, Jan 1, 2012 $22,000 Cr $1,42,000 Cr $1,20,000 Dr
Service Cost $28,400 Dr $28,400 Cr
InterestCost $11,360 Dr $11,360 Cr
Actual Return $40,000 Cr $40,000 Dr
Unexpected Loss $28,000 Dr $28,000 Cr
Amortization of PSC $0 Dr $0 Cr
Amortization of Loss $475 Dr $475 Cr
Contribution $82,000 Cr $82,000 Dr
Benefits Paid $64,200 Dr $64,200 Cr
Increse in prior service cost 38000 Dr $38,000 Cr
Increase in liabilities $44,000 Dr $44,000 Cr
Journal Entries for 2017 $28,235 Dr $82,000 Cr $38,000 Dr $15,525 Dr $240 Dr
Accumulated OCI, Dec 31, 2011 $42,000 Dr $18,000 Dr
Balance, Dec 31, 2017 $80,000 Dr $33,525 Cr $21,760 Cr $1,99,560 Cr $1,77,800 Dr
Expected Return $12,000 ($120,000*10%)

Requirement 3

Date Particulars Debit Credit
31/12/12 Pension Expenses $28,235
Plan Assets $40,000
To Projected benefit obligations $39,760
To OCI Gain/Loss $28,475
(being pension expenses for the year 2012 recorded)

ekkarill92 answered 1 year ago
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