Glesen Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2008 and 2009.
AND SO ON
Instructions
(a) Prepare a pension worksheet presenting both years 2008 and 2009 and accompanying computations including the computation of the minimum liability (2008 and 2009) and amortization of the unrecognized loss (2009) using the corridor approach.
(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year.
(c) At December 31, 2009, prepare a schedule reconciling the funded status of the pension plan with the pension amounts reported in the financial statements.
Click here for the solution: Glesen Company sponsors a defined benefit pension plan for its employees
Showing posts with label defined. Show all posts
Showing posts with label defined. Show all posts
Wednesday, November 25, 2015
Wednesday, November 11, 2015
On January 1, 2008, Diana Peter Company has the following defined benefit pension plan balances
P20-1 (Two-Year Worksheet) On January 1, 2008, Diana Peter Company has the following defined benefit pension plan balances.
Projected benefit obligation $4,200,000
Fair value of plan assets $4,200,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2009 the company amends its pension agreement so that prior service costs of $500,000 area created. Other data related to the pension plan are as follows.
2008 2009
Services costs 150,000 180,000
Prior service costs amortization 0 90,000
Contributions (funding) to plan 140,000 185,000
Benefits paid 200,000 280,000
Actual return on plan assets 252,000 260,000
Expected rate of return on assets 6% 8%
Instructions
a.) Prepare a pension worksheet for the pension plan for 2008 & 2009
b.) For 2009, prepare the journal entry to record pension related amounts.
Click here for the solution: On January 1, 2008, Diana Peter Company has the following defined benefit pension plan balances
Projected benefit obligation $4,200,000
Fair value of plan assets $4,200,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2009 the company amends its pension agreement so that prior service costs of $500,000 area created. Other data related to the pension plan are as follows.
2008 2009
Services costs 150,000 180,000
Prior service costs amortization 0 90,000
Contributions (funding) to plan 140,000 185,000
Benefits paid 200,000 280,000
Actual return on plan assets 252,000 260,000
Expected rate of return on assets 6% 8%
Instructions
a.) Prepare a pension worksheet for the pension plan for 2008 & 2009
b.) For 2009, prepare the journal entry to record pension related amounts.
Click here for the solution: On January 1, 2008, Diana Peter Company has the following defined benefit pension plan balances
Tuesday, November 10, 2015
Differentiate between a defined contribution pension plan and a defined benefit pension plan
Chapter 20: Question 2
Differentiate between a defined contribution pension plan and a defined benefit pension plan. Explain how the employer’s obligation differs between the two types of plans.
Click here for the solution: Differentiate between a defined contribution pension plan and a defined benefit pension plan
Differentiate between a defined contribution pension plan and a defined benefit pension plan. Explain how the employer’s obligation differs between the two types of plans.
Click here for the solution: Differentiate between a defined contribution pension plan and a defined benefit pension plan
(ACC 423 Week 5) The following defined pension data of Doreen Corp. apply to the year 2008
ACC 423 Week Five (Week 5)
Exercise 20-7 (E20-7) (Basic Pension Worksheet) The following defined pension data of Doreen Corp. apply to the year 2008.
Projected benefit obligation, 1/1/08 (before amendment) $560,000
Plan assets, 1/1/08 546,200
Prepaid/accrued pension cost (credit) 13,800
On January 1, 2008, Doreen Corp., through plan amendment, grants prior service benefits having a present value of 100,000
Settlement rate 9%
Service cost 58,000
Contributions (funding) 55,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2008 17,000
Instructions
For 2008, prepare a pension worksheet for Doreen Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
Click here for the solution: (ACC 423 Week 5) The following defined pension data of Doreen Corp. apply to the year 2008
Exercise 20-7 (E20-7) (Basic Pension Worksheet) The following defined pension data of Doreen Corp. apply to the year 2008.
Projected benefit obligation, 1/1/08 (before amendment) $560,000
Plan assets, 1/1/08 546,200
Prepaid/accrued pension cost (credit) 13,800
On January 1, 2008, Doreen Corp., through plan amendment, grants prior service benefits having a present value of 100,000
Settlement rate 9%
Service cost 58,000
Contributions (funding) 55,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2008 17,000
Instructions
For 2008, prepare a pension worksheet for Doreen Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
Click here for the solution: (ACC 423 Week 5) The following defined pension data of Doreen Corp. apply to the year 2008
Mantle Company sponsors a defined benefit pension plan
P20-4 (Pension Expense, Minimum Liability, Journal Entries for 2 Years) Mantle Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2007 and 2008.
Plan assets (fair value), December 31 - 2007: $380,000 2008: $465,000
Projected benefit obligation, January 1 - 2007: $600,000 2008: $700,000
Prepaid/(accrued) pension cost balance, January 1 - 2007: (40,000) 2008: $?
Unrecognized prior service cost, January 1 - 2007: $250,000 2008: $240,000
Service cost - 2007: $60,000 2008: $90,000
Actual and expected return on plan assets – 2007: $24,000 2008: $30,000
Amortization of prior service cost - 2007: $10,000 2008: $12,000
Contributions (funding) - 2007: $110,000 2008: $120,000
Accumulated benefit obligation, December 31 - 2007: $500,000 2008: $550,000
Additional pension liability balance, January 1 - 2007: $50,000 2008: $?
Interest/settlement rate - 2007: 9% 2008: 9%
Instructions
(a) Compute pension expense for 2007 and 2008.
(b) Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.
(c) Compute the minimum liability for 2007 and 2008.
(d) Prepare the journal entries to record the minimum liability for both years.
Click here for the solution: Mantle Company sponsors a defined benefit pension plan
Plan assets (fair value), December 31 - 2007: $380,000 2008: $465,000
Projected benefit obligation, January 1 - 2007: $600,000 2008: $700,000
Prepaid/(accrued) pension cost balance, January 1 - 2007: (40,000) 2008: $?
Unrecognized prior service cost, January 1 - 2007: $250,000 2008: $240,000
Service cost - 2007: $60,000 2008: $90,000
Actual and expected return on plan assets – 2007: $24,000 2008: $30,000
Amortization of prior service cost - 2007: $10,000 2008: $12,000
Contributions (funding) - 2007: $110,000 2008: $120,000
Accumulated benefit obligation, December 31 - 2007: $500,000 2008: $550,000
Additional pension liability balance, January 1 - 2007: $50,000 2008: $?
Interest/settlement rate - 2007: 9% 2008: 9%
Instructions
(a) Compute pension expense for 2007 and 2008.
(b) Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.
(c) Compute the minimum liability for 2007 and 2008.
(d) Prepare the journal entries to record the minimum liability for both years.
Click here for the solution: Mantle Company sponsors a defined benefit pension plan
Sunday, September 27, 2015
Beale Management has a noncontributory, defined benefit pension plan
E 17-19 Record pension expense, funding, and gains and losses; determine account balances
Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2011 (the end of Beale's fiscal year), the following pension-related data were available:
Projected Benefit Obligation ($in millions)
Balance, January 1, 2011 $480
Service cost 82
Interest cost, discount rate, 5% 24
Gain due to changes in actuarial assumptions in 2011 (10)
Pension benefits paid (40)
Balance, December 31, 2011 $536
Plant Assets Balance, January 1, 2011 $500
Actual return on plan assets 40
(Expected return on plan assets, $45)
Cash Contributions 70
Pension benefits paid (40)
Balance, December 31, 2011 $570
January 1, 2011, balances:
Pension asset $20
Prior service cost-AOCI (amortization $8 per year) 48
Net gain-AOCI (any amortization over 15 years) 80
Required:
1. Prepare the 2011 journal entry to record pension expense.
2. Prepare the journal entry(s) to record any 2011 gains and losses.
3. Prepare the 2011 journal entries to record the contribution to plan assets and benefit payments to retirees.
4. Determine the balances at December 31, 2011, in the PBO, plan assets, the net gain–AOCI, and prior service cost–AOCI and show how the balances changed during 2011. [Hint: You might find T-accounts useful.]
5. What amount will Beale report in its 2011 balance sheet as a net pension asset or net pension liability for the funded status of the plan?
Click here for the solution: Beale Management has a noncontributory, defined benefit pension plan
Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2011 (the end of Beale's fiscal year), the following pension-related data were available:
Projected Benefit Obligation ($in millions)
Balance, January 1, 2011 $480
Service cost 82
Interest cost, discount rate, 5% 24
Gain due to changes in actuarial assumptions in 2011 (10)
Pension benefits paid (40)
Balance, December 31, 2011 $536
Plant Assets Balance, January 1, 2011 $500
Actual return on plan assets 40
(Expected return on plan assets, $45)
Cash Contributions 70
Pension benefits paid (40)
Balance, December 31, 2011 $570
January 1, 2011, balances:
Pension asset $20
Prior service cost-AOCI (amortization $8 per year) 48
Net gain-AOCI (any amortization over 15 years) 80
Required:
1. Prepare the 2011 journal entry to record pension expense.
2. Prepare the journal entry(s) to record any 2011 gains and losses.
3. Prepare the 2011 journal entries to record the contribution to plan assets and benefit payments to retirees.
4. Determine the balances at December 31, 2011, in the PBO, plan assets, the net gain–AOCI, and prior service cost–AOCI and show how the balances changed during 2011. [Hint: You might find T-accounts useful.]
5. What amount will Beale report in its 2011 balance sheet as a net pension asset or net pension liability for the funded status of the plan?
Click here for the solution: Beale Management has a noncontributory, defined benefit pension plan
Abbott and Abbott has a noncontributory, defined benefit pension plan
E 17-10 Determine pension expense
Abbott and Abbott has a noncontributory, defined benefit pension plan. At December 31, 2011, Abbott and Abbott received the following information:
($in millions)
Projected Benefit Obligation
Balance, January 1 $120
Service cost 20
Interest cost 12
Benefits paid (9)
Balance, December 31 $143
Plant Assets
Balance, January 1 $80
Actual return on plan assets 9
Contribution 2011 20
Benefits paid (9)
Balance, December 31 $100
The expected long-term rate of return on plan assets was 10%. There was no prior service cost and a negligible net loss AOCI on January 1, 2011.
Required:
Determine Abbott and Abbott’s pension expense for 2011. Prepare the journal entries to record Abbott and Abbott’s pension expense, funding, and payment for 2011.
Click here for the solution: Abbott and Abbott has a noncontributory, defined benefit pension plan
Abbott and Abbott has a noncontributory, defined benefit pension plan. At December 31, 2011, Abbott and Abbott received the following information:
($in millions)
Projected Benefit Obligation
Balance, January 1 $120
Service cost 20
Interest cost 12
Benefits paid (9)
Balance, December 31 $143
Plant Assets
Balance, January 1 $80
Actual return on plan assets 9
Contribution 2011 20
Benefits paid (9)
Balance, December 31 $100
The expected long-term rate of return on plan assets was 10%. There was no prior service cost and a negligible net loss AOCI on January 1, 2011.
Required:
Determine Abbott and Abbott’s pension expense for 2011. Prepare the journal entries to record Abbott and Abbott’s pension expense, funding, and payment for 2011.
Click here for the solution: Abbott and Abbott has a noncontributory, defined benefit pension plan
Sunday, September 6, 2015
The City of Sweetwater maintains an Employees’ Retirement Fund, a single-employer, defined benefit plan that provides annuity and disability benefits
7-13 The City of Sweetwater maintains an Employees’ Retirement Fund, a single-employer, defined benefit plan that provides annuity and disability benefits. The fund is financed by actuarially determined contributions from the city’s General Fund and by contributions from employees. Administration of the retirement fund is handled by General Fund employees, and the retirement fund does not bear any administrative expenses. The Statement of Net Assets for the Employees’ Retirement Fund as of July 1, 2011, is shown here:
CITY OF SWEETWATER
Employees' Retirement Fund
Statement of Net Assets
As of July 1, 2011
Assets
Cash $ 50,000
Accrued interest receivable 135,000
Investments, at fair value:
Bonds 4,500,000
Common stocks 1,300,000
Total assets 5,985,000
Liabilities
Accounts payable and accrued expenses 350,000
Net assets held in trust for preparation for benefits $5,635,000
During the year ended June 30, 2012, the following transaction occurred:
The interest receivable on investments was collected in cash.
Member contributions in the amount of $400,000 were received in cash. The city’s General Fund also contributed $600,000 in cash.
Annuity benefits of $700,000 and disability benefits of $150,000 were recorded as liabilities.
Accounts payable and accrued expenses in the amount of $900,000 were paid in cash.
Interest income of $240,000 and dividends in the amount of $40,000 were received in cash. In addition, bond interest income of $140,000 was accrued at year-end.
Refunds of $130,000 were made in cash to terminated, nonvested participants.
Common stocks, carried at a fair value of $500,000, were sold for $480,000. That $480,000, plus an additional $300,000, was invested in stocks.
At year-end, it was determined that the fair value of stocks held by the pension plan had decreased by $50,000; the fair value of bonds had increased by $30,000.
Nominal accounts for the year were closed.
a.) Record the transactions on the books of the Employees’ Retirement Fund.
b.) Prepared a Statement of Changes in Net Assets for the Employees’ Retirement Fund for the Year Ended June 30, 2012.
c.) Prepare a Statement of Net Assets for the Employees’ Retirement Fund as of June 30, 2012.
Click here for the solution: The City of Sweetwater maintains an Employees’ Retirement Fund, a single-employer, defined benefit plan that provides annuity and disability benefits
CITY OF SWEETWATER
Employees' Retirement Fund
Statement of Net Assets
As of July 1, 2011
Assets
Cash $ 50,000
Accrued interest receivable 135,000
Investments, at fair value:
Bonds 4,500,000
Common stocks 1,300,000
Total assets 5,985,000
Liabilities
Accounts payable and accrued expenses 350,000
Net assets held in trust for preparation for benefits $5,635,000
During the year ended June 30, 2012, the following transaction occurred:
The interest receivable on investments was collected in cash.
Member contributions in the amount of $400,000 were received in cash. The city’s General Fund also contributed $600,000 in cash.
Annuity benefits of $700,000 and disability benefits of $150,000 were recorded as liabilities.
Accounts payable and accrued expenses in the amount of $900,000 were paid in cash.
Interest income of $240,000 and dividends in the amount of $40,000 were received in cash. In addition, bond interest income of $140,000 was accrued at year-end.
Refunds of $130,000 were made in cash to terminated, nonvested participants.
Common stocks, carried at a fair value of $500,000, were sold for $480,000. That $480,000, plus an additional $300,000, was invested in stocks.
At year-end, it was determined that the fair value of stocks held by the pension plan had decreased by $50,000; the fair value of bonds had increased by $30,000.
Nominal accounts for the year were closed.
a.) Record the transactions on the books of the Employees’ Retirement Fund.
b.) Prepared a Statement of Changes in Net Assets for the Employees’ Retirement Fund for the Year Ended June 30, 2012.
c.) Prepare a Statement of Net Assets for the Employees’ Retirement Fund as of June 30, 2012.
Click here for the solution: The City of Sweetwater maintains an Employees’ Retirement Fund, a single-employer, defined benefit plan that provides annuity and disability benefits
Friday, August 21, 2015
The following defined pension data of Rydell Corp. apply to the year 2010
The following defined pension data of Rydell Corp. apply to the year 2010. For 2010, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
Projected benefit obligation, 1/1/10 (before amendment) $560,000
Plan assets, 1/1/10 546,200
Pension liability 13,800
On January 1, 2010, Rydell Corp., through plan amendment,
grants prior service benefits having a present value of 120,000
Settlement rate 9%
Service cost 58,000
Contributions (funding) 65,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2010 17,000
Instructions:
For 2010, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
Click here for the solution: The following defined pension data of Rydell Corp. apply to the year 2010
Projected benefit obligation, 1/1/10 (before amendment) $560,000
Plan assets, 1/1/10 546,200
Pension liability 13,800
On January 1, 2010, Rydell Corp., through plan amendment,
grants prior service benefits having a present value of 120,000
Settlement rate 9%
Service cost 58,000
Contributions (funding) 65,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2010 17,000
Instructions:
For 2010, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
Click here for the solution: The following defined pension data of Rydell Corp. apply to the year 2010
Sunday, July 12, 2015
Gordon Company sponsors a defined benefit pension plan
(Pension Expense, Journal Entries for 2 Years) Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2010 and 2011.
2010 2011
Plan assets (fair value), December 31 $699,000 $849,000
Projected benefit obligation, January 1 700,000 800,000
Pension asset/Liability, January 1 140,000 Cr. ?
Prior service cost, January 1 250,000 240,000
Service cost 60,000 90,000
Actual and expected return on plan assets 24,000 30,000
Amortization of prior service cost 10,000 12,000 Contributions (funding) 115,000 120,000
Accumulated benefit obligation, December 31 500,000 550,000
Interest/settlement rate 9% 9%
(a) Compute pension expense for 2010 and 2011.
(b) Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.
Click here for the solution: Gordon Company sponsors a defined benefit pension plan
2010 2011
Plan assets (fair value), December 31 $699,000 $849,000
Projected benefit obligation, January 1 700,000 800,000
Pension asset/Liability, January 1 140,000 Cr. ?
Prior service cost, January 1 250,000 240,000
Service cost 60,000 90,000
Actual and expected return on plan assets 24,000 30,000
Amortization of prior service cost 10,000 12,000 Contributions (funding) 115,000 120,000
Accumulated benefit obligation, December 31 500,000 550,000
Interest/settlement rate 9% 9%
(a) Compute pension expense for 2010 and 2011.
(b) Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.
Click here for the solution: Gordon Company sponsors a defined benefit pension plan
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