E20.13 (LO 1, 2, 4) (Computation of Actual Return, Gains and Losses, Corridor Test, and Pension...

E20.13 (LO 1, 2, 4) (Computation of Actual Return, Gains and Losses, Corridor Test, and Pension Expense) Erickson Company sponsors a defi ned benefi t pension plan. The corporation’s actuary provides the following information about the plan. January 1, December 31, 2020 2020 Vested benefi t obligation $1,500 $1,900 Accumulated benefi t obligation 1,900 2,730 Projected benefi t obligation 2,500 3,300 Plan assets (fair value) 1,700 2,620 January 1, December 31, 2020 2020 Settlement rate and expected rate of return 10% Pension asset/liability $ 800 $ ? Service cost for the year 2020 400 Contributions (funding in 2020) 700 Benefi ts paid in 2020 200 Instructions a. Compute the actual return on the plan assets in 2020. b. Compute the amount of the other comprehensive income (G/L) as of December 31, 2020. (Assume the January 1, 2020, balance was zero.) c. Compute the amount of net gain or loss amortization for 2020 (corridor approach). d. Compute pension expense for 2020.

E20.14 (LO 1, 2, 4) (Worksheet for E20.13) Using the information in E20.13 about Erickson Company’s defi ned benefi t pension plan, prepare a 2020 pension worksheet with supplementary schedules of computations. Prepare the journal entries at December 31, 2020, to record pension expense and related pension transactions. Also, indicate the pension amounts reported in the balance sheet.

only E20.14

Solutions

Expert Solution

		Year 2020
1	Pension Expense	$ 480
2	Journal entry
	Account title & Explaination	2020
	Debit	Credit
	Annual pension expense	$ 480
	OCI-Prior Service Cost	$ -
	OCI-(Gain/Loss)	$ 100
	Cash		$ 700
	Net Pension Asset/liability	$ 120
	(To record pension expense and remeasurement loss recorded)

3	Plan Asset	700
	Cash		700
	(To record the contribution made)

	Net Pension Asset/liability	200
	Cash		200
	(To record benefit paid)

4	Net Pension Asset/(liability)	$ (680)

5	Projected benefit obligation	$ (3,300)
	Plan Asset	$ 2,620
	Plan Surplus/(Deficit)	$ (680)

ekkarill92 answered 2 years ago

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Subjects

										0.08
Pension Worksheet 2020-IFRS
Items	Annual Pension Expense	Cash	OCI-Prior Service Cost	OCI-Gain/(Loss)	Pension Asset/liability	Projected benefit obligation	Plan Asset
Balance, Jan 1,2020	$ -	$ -	$ -	$ -	$ (800)	$ (2,500)	$ 1,700
Past Service Cost created	$ -	$ -	$ -	$ -	$ -	$ -	$ -
Service Cost	$ 400	$ -		$ -	$ -	$ (400)	$ -
Interest Cost	$ 250	$ -		$ -	$ -	$ (250)	$ -	Actual return - Expected return		Gain/(loss)
Actual return	$ (420)	$ -		$ -	$ -	$ -	$ 420	$ 420.00	$ 170.00	$ 250.00
Unexpected gain/ loss	$ 250	$ -		$ 250	$ -	$ -	$ -	24.71%	10.00%
Amortisation of PSC	$ -	$ -	$ -	$ -	$ -	$ -
Amortisation of OCI-Gain/loss	$ -	$ -		$ -	$ -	$ -
Liability (increases)/decreases	$ -	$ -		$ (350)	$ -	$ (350)		10% of higher of PBO or Plan asset		$ 170.00
Contributions	$ -	$ (700)		$ -	$ -	$ -	$ 700	OCI-Gain/(Loss)	$ -
Benefits	$ -	$ -		$ -	$ -	$ 200	$ (200)	Amount to be amortised		$ 170.00