18. Adam Plc sponsor a defined benefit plan for its 120 employees. On January 1, 2019, the company's actuary provided the following information. Pension Plan Assets (fair value and market-related asset value) Accumulated benefit obligation £240,000 290,000 Defined benefit obligation 410,000 The average remaining service period for the participating employees is 10 years. All employees are expected to receive benefits under the plan. On December 31, 2019, the actuary calculated that the present value of future benefits earned for employee services rendered in the current year amounted to £55,000; the defined benefit obligation was £520,000, fair value of pension assets was £296,000, and the accumulated benefit obligation amounted to £380,000. The discount (interest) rate is 10%. The actual return on plan assets is £13,000. The company's current year's contribution to the pension plan amounted to £72,000. No benefits were paid during the year. Instructions (a) Determine the components of pension expense that the company would recognize in 2019. (b) Prepare the journal entry to record the pension expense and the company's funding of the pension plan in 2019. (c) Compute the amount of the 2019 increase/decrease in gains or losses.
18. Adam Plc sponsor a defined benefit plan for its 120 employees. On January 1, 2019, the company's actuary provided the following information. Pension Plan Assets (fair value and market-related asset value) Accumulated benefit obligation £240,000 290,000 Defined benefit obligation 410,000 The average remaining service period for the participating employees is 10 years. All employees are expected to receive benefits under the plan. On December 31, 2019, the actuary calculated that the present value of future benefits earned for employee services rendered in the current year amounted to £55,000; the defined benefit obligation was £520,000, fair value of pension assets was £296,000, and the accumulated benefit obligation amounted to £380,000. The discount (interest) rate is 10%. The actual return on plan assets is £13,000. The company's current year's contribution to the pension plan amounted to £72,000. No benefits were paid during the year. Instructions (a) Determine the components of pension expense that the company would recognize in 2019. (b) Prepare the journal entry to record the pension expense and the company's funding of the pension plan in 2019. (c) Compute the amount of the 2019 increase/decrease in gains or losses.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:18. Adam Plc sponsor a defined benefit plan for its 120
employees. On January
provided the following information.
Pension Plan Assets (fair value and market-related asset
value)
Accumulated benefit obligation
1,
2019, the company's actuary
£240,000
290,000
Defined benefit obligation
410,000
The average remaining service period for the participating
employees is 10 years. All employees are expected to receive
benefits under the plan. On December 31, 2019, the actuary
calculated that the present value of future benefits earned for
employee services rendered in the current year amounted to
£55,000; the defined benefit obligation was £520,000, fair
value of pension assets was £296,000, and the accumulated
benefit obligation amounted to £380,000. The discount
(interest) rate is 10%. The actual return on plan assets is
£13,000. The company's current year's contribution to the
pension plan amounted to £72,000. No benefits were paid
during the year.
Instructions
(a) Determine the components of pension expense that the
company would recognize in 2019.
(b) Prepare the journal entry to record the pension expense
and the company's funding of the pension plan in 2019.
(c) Compute the amount of the 2019 increase/decrease in
gains or losses.
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