Happy Steel Corporation has provided the following information regarding theirdefined benefit pension plan for the year 2018:3Current service costContribution to the planPast service cost, effective December 31, 2018Actual return on plan assetsBenefits paidNet defined benefit liability at January 1, 2018Plan assets at January 1, 2018Defined benefit obligation at January 1, 2018Interest/discount rate on the DBO and plan assets$ 235,000262,50050,000160,000100,000400,0001,600,0002,000,00010% In addition, Happy Steel follows IFRS.Required:1) Prepare a continuity schedule for 2018 for the defined benefit obligation.2) Prepare a continuity schedule for 2018 for the plan assets.3) Calculate pension expense for the year 2018.4) Prepare all pension journal entries recorded by Tata Steel in 2018.5) What pension amount will appear on Tata Steel's statement of financialposition at December 31, 2018?

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In addition, Happy Steel follows IFRS. Required: 1) Prepare a continuity schedule for 2018 for the defined benefit obligation. 2) Prepare a continuity schedule for 2018 for the plan assets. 3) Calculate pension expense for the year 2018.

In addition, Happy Steel follows IFRS. Required: 1) Prepare a continuity schedule for 2018 for the defined benefit obligation. 2) Prepare a continuity schedule for 2018 for the plan assets. 3) Calculate pension expense for the year 2018.

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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Concept explainers

Employee Benefits

In an organization employees are the most important resource and most important asset. They can lead an organization to the sky or can be the reason for unsuccessful of business. Therefore, it is very much important that employees of an organization should be satisfied by the environment of the organization and most importantly with the salary, wages incentives, etc.

Question

Happy Steel Corporation has provided the following information regarding their
defined benefit pension plan for the year 2018:
3
Current service cost
Contribution to the plan
Past service cost, effective December 31, 2018
Actual return on plan assets
Benefits paid
Net defined benefit liability at January 1, 2018
Plan assets at January 1, 2018
Defined benefit obligation at January 1, 2018
Interest/discount rate on the DBO and plan assets
$ 235,000
262,500
50,000
160,000
100,000
400,000
1,600,000
2,000,000
10%

In addition, Happy Steel follows IFRS.
Required:
1) Prepare a continuity schedule for 2018 for the defined benefit obligation.
2) Prepare a continuity schedule for 2018 for the plan assets.
3) Calculate pension expense for the year 2018.
4) Prepare all pension journal entries recorded by Tata Steel in 2018.
5) What pension amount will appear on Tata Steel's statement of financial
position at December 31, 2018?

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Step 1: Define IFRS, DBO, Plan Assets, & Pension Expense

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Step 2: Computation of the continuity schedule for Defined Benefit Obligation (DBO) in 2018:

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Step 3: Continuity Schedule for Plan Assets in 2018:

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Step 4: Pension expense for the year 2018:

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Accounting for Employee Compensations and Benefits

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