Bostonian Company provided the following information related to its defined benefit pension plan for 20X1: PBO on 1/1$2,500,000 Fair value of plan assets on 1/1 2,000,000 Service cost 120,000 Actual return on plan assets 320,000 Payments made to retirees on 12/31 100,000 Amortization of prior service cost 40,000 Recognized actuarial losses 50,000 Contributions made to plan at 12/31 80,000 Interest rate for discounting pension obligations 6%Expected return on plan assets 8% Required:What amount was recognized in OCI in 20X1? Be sure to indicate whether OCI amount represented a loss or a (gain).

Introduction Earnings, liabilities, returns, and deficits which have not yet been recognized were included in other comprehensive income (OCI) in accounting information. Unexploited profits and losses which are reduced below retained earnings and are shown in the equity section of the balance sheet are included in statement of comprehensive income (OCI). Capital gains on some investment categories, retirement funds, and trading activities can all be included as other comprehensive income. Service costing, often referred to as operating costing, is a technique for estimating expenses that is employed by companies that provide services. For instance, service costing is used by transportation firms, power providers, healthcare, theaters, institutions, and organizations to determine the price per unit.Solution 1) Compute the amount to be recognized in OCI; A B Particulars Amount ($) 1 Actual rate of return on plan assets 320,000.00 2 Return estimated on plan assets (120,000.00) 3 Amount to be recognized in OCI 200,000.00 4 Recognized financial losses (50,000.00) 5 Amount (gain) recognized in OCI, net of losses 150,000.00 Hence, the amount to be recognized in OCI (gross) is $200,000 and net of losses is $150,000. Explanation Working: A B Particulars Amount ($) 1 Actual rate of return on plan assets 320,000 2 Return estimated on plan assets 2,000,000 x 6% 3 Amount to be recognized in OCI B1 + B2 4 Recognized financial losses -50,000 5 Amount (gain) recognized in OCI, net of losses B3 + B4 Final answer The amount to be recognized in OCI (gross) is $200,000 and net of losses is $150,000.

Answered: Bostonian Company provided the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Bostonian Company provided the following information related to its defined benefit pension plan for 20X1:


PBO on 1/1	$	2,500,000
Fair value of plan assets on 1/1		2,000,000
Service cost		120,000
Actual return on plan assets		320,000
Payments made to retirees on 12/31		100,000
Amortization of prior service cost		40,000
Recognized actuarial losses		50,000
Contributions made to plan at 12/31		80,000
Interest rate for discounting pension obligations		6	%
Expected return on plan assets		8	%

Required:

What amount was recognized in OCI in 20X1? Be sure to indicate whether OCI amount represented a loss or a (gain).

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

Bostonian Company provided the following information related to its defined benefit pension plan for 20X1:


PBO on 1/1	$	2,500,000
Fair value of plan assets on 1/1		2,000,000
Service cost		120,000
Actual return on plan assets		320,000
Payments made to retirees on 12/31		100,000
Amortization of prior service cost		40,000
Recognized actuarial losses		50,000
Contributions made to plan at 12/31		80,000
Interest rate for discounting pension obligations		6	%
Expected return on plan assets		8	%

What amount of pension expense should Bostonian report for 20X1?
What is the fair value of plan assets at December 31, 20X1?
What amount was recognized in OCI in 20X1? Be sure to indicate whether OCI amount represented a loss or a (gain).

Solution

by Bartleby Expert

SEE SOLUTION

Knowledge Booster

Accounting for Employee Compensations and Benefits

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions