For Year Ended December 31, 2017 2018 2019 Plan assets (fair value) Accumulated benefit obligation Projected benefit obligation Net (gain) loss (for purposes of corridor calculation) Employer's funding contribution (made at end of year) $ 85,000 $50,000 45,000 60,000 $180,000 165,000 292,000 200,000 324,000 -0- 78,400 81,033 50,000 60,000 105,000
(Computation of Pension Expense, Amortization of Net Gain or Loss Corridor Approach,
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There were no balances as of January 1, 2017, when the plan was initiated. The actual and expected return on plan assets was 10% over the 3-year period, but the settlement rate used to discount the company’s pension obligation was 13% in 2017, 11% in 2018, and 8% in 2019. The service cost component of net periodic pension expense amounted to the following: 2017, $60,000; 2018, $85,000; and 2019, $119,000. The average remaining service life per employee is 12 years. No benefits were paid in 2017, $30,000 of benefits were paid in 2018, and $18,500 of benefits were paid in 2019 (all benefits paid at end of year).
Instructions
(Round to the nearest dollar.)
(a) Calculate the amount of net periodic pension expense that the company would recognize in 2017, 2018, and 2019.
(b) Prepare the journal entries to record net periodic pension expense, employer’s funding contribution, and related pension amounts for the years 2017, 2018, and 2019.
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