ed                                                                (1,200) actuarial revaluation, December 31, 2016, change in mortality assumptions, incr

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following data pertains to a defined benefit (DB) pension plan:

defined benefit obligation, December 31, 2015               25,000

long-term interest rate on corporate bonds                         10%

past service cost, December 31, 2016, benefits and

liability reduced                                                                (1,200)

actuarial revaluation, December 31, 2016, change in

mortality assumptions, increased liability                             600

actual return on plan assets - 2016                                   2,100

fair value of plan assets, December 31, 2015                 16,000

funding payment at December 31, 2016                           4,000

benefits paid to retirees - 2016                                          2,000

current service cost - 2016                                                1,900

 

Required:

  1. Calculate the net defined benefit pension asset/liability at December 31, 2015. 
  2. For December 31, 2016, calculate the defined benefit obligation, fair value of plan assets and the net defined benefit pension asset or liability. 
  3. Calculate the three pension accounting elements and journal entries for service cost, net interest and revaluations for 2016. 
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