FMC Inc. provides its employees with a defined benefit pension plan. Details are as follows: Present value defined benefit obligation (DBO) - December 31, 2020 Plan assets - December 31, 2020 Plan's actuary confirmed that 4% is the appropriate interest rate to $7,000,000 $5,900,000 use. Current service costs (CSC) for the year Past service costs (PSC) (improvement in benefits) - January 1, 2020 Expected ending DBO- December 31, 2020 Expected ending plan assets - December 31, 2020 Remitted to pension trustee- evenly throughout year Payments to retirees- evenly throughout year $590,000 $60,000 $7,200,000 $6,500,000 $670,000 $640,000 What journal entry should FMC prepare to record the remeasurement gains/losses and actuarial gains/losses for the year? ASsume FMC reports under IFRS. a) DR OCI - actuarial losses 200,000 DR OCI - losses on remeasurement of plan assets 600,000 CR Net defined benefit liability 800,000 DR OCI- actuarial losses b) DR Net defined benefit liability 200,000 400,000 CR OCI - gains on remeasurement of plan assets 600,000 DR Net defined benefit liability CR OCI - actuarial gains CR OCI 800,000 200,000 gains on remeasurement of plan assets 600,000 O d) DR OCI losses on remeasurement of plan assets CR OCI CR Net defined benefit liability 600,000 actuarial gains 200,000 400,000
FMC Inc. provides its employees with a defined benefit pension plan. Details are as follows: Present value defined benefit obligation (DBO) - December 31, 2020 Plan assets - December 31, 2020 Plan's actuary confirmed that 4% is the appropriate interest rate to $7,000,000 $5,900,000 use. Current service costs (CSC) for the year Past service costs (PSC) (improvement in benefits) - January 1, 2020 Expected ending DBO- December 31, 2020 Expected ending plan assets - December 31, 2020 Remitted to pension trustee- evenly throughout year Payments to retirees- evenly throughout year $590,000 $60,000 $7,200,000 $6,500,000 $670,000 $640,000 What journal entry should FMC prepare to record the remeasurement gains/losses and actuarial gains/losses for the year? ASsume FMC reports under IFRS. a) DR OCI - actuarial losses 200,000 DR OCI - losses on remeasurement of plan assets 600,000 CR Net defined benefit liability 800,000 DR OCI- actuarial losses b) DR Net defined benefit liability 200,000 400,000 CR OCI - gains on remeasurement of plan assets 600,000 DR Net defined benefit liability CR OCI - actuarial gains CR OCI 800,000 200,000 gains on remeasurement of plan assets 600,000 O d) DR OCI losses on remeasurement of plan assets CR OCI CR Net defined benefit liability 600,000 actuarial gains 200,000 400,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:FMC Inc. provides its employees with a defined benefit pension plan. Details are as
follows:
$7,000,000
Present value defined benefit obligation (DBO) – December 31,
2020
$5,900,000
Plan assets - December 31, 2020
Plan's actuary confirmed that 4% is the appropriate interest rate to
use.
$590,000
Current service costs (CSC) for the year
Past service costs (PSC) (improvement in benefits)- January 1, 2020
Expected ending DBO – December 31, 2020
Expected ending plan assets
Remitted to pension trustee – evenly throughout year
Payments to retirees- evenly throughout year
$60,000
$7,200,000
$6,500,000
$670,000
$640,000
December 31, 2020
What journal entry should FMC prepare to record the remeasurement gains/losses
and actuarial gains/losses for the year? Assume FMC reports under IFRS.
DR OCI - actuarial losses
a)
DR OCI - losses on remeasurement of plan
200,000
assets
600,000
CR Net defined benefit liability
800,000
DR OCI - actuarial losses
b)
DR Net defined benefit liability
200,000
400,000
CR OCI - gains on remeasurement of plan
assets
600,000
Mail
DR Net defined benefit liability
c)
800,000
CR OCI
actuarial gains
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200,000
CR OCI - gains on remeasurement of plan
assets
600,000
d)
assets
DR OCI - losses on remeasurement of plan
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600,000
CR OCI - actuarial gains
CR Net defined benefit liability
200,000
400,000
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