W13-3 Happy Company sponsors a defined benefit pension plan for its employees. The following datarelate to the operation of the plan for the year 2019 in which no benefits were paid.1. The actuarial present value of future benefits earned by employees for services rendered in 2019amounted to P56, 000.2. The company's funding policy requires a contribution to the pension trustee amounting to P145, 000 for2019.3. As of January 1, 2019, the company had a projected benefit obligation of P900, 000, an accumulatedbenefit obligation of P800, 000, and a balance of P400, 000 in accumulated OCI (PSC). The fair value ofpension plan assets amounted to P600, 000 at the beginning of the year. The actual and expected return onplan assets was P54, 000. The settlement rate was 9%. No gains or losses occurred in 2019 and no benefitswere paid.4. Amortization of prior service cost was $50,000 in 2012. Amortization of net gain or loss was not requiredin 2012.Instructions:(a) Determine the amounts of the components of pension expense that should be recognized by the companyin 2019.(b) Prepare the journal entry or entries to record pension expense and the employer's contribution to thepension trustee in 2019.(c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year2019

Pension expense is defined as the equivalent sum recorded by the entity for expenses associated with…

Instruetions: (a) Determine the amounts of the components of pension expense that should be recognized by the company in 2019. (b) Prepare the journal entry or entries to record pension expense and the employer's contribution to the pension trustee in 2019. (c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year 2019

Instruetions: (a) Determine the amounts of the components of pension expense that should be recognized by the company in 2019. (b) Prepare the journal entry or entries to record pension expense and the employer's contribution to the pension trustee in 2019. (c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year 2019

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

W13-3 Happy Company sponsors a defined benefit pension plan for its employees. The following data
relate to the operation of the plan for the year 2019 in which no benefits were paid.
1. The actuarial present value of future benefits earned by employees for services rendered in 2019
amounted to P56, 000.
2. The company's funding policy requires a contribution to the pension trustee amounting to P145, 000 for
2019.
3. As of January 1, 2019, the company had a projected benefit obligation of P900, 000, an accumulated
benefit obligation of P800, 000, and a balance of P400, 000 in accumulated OCI (PSC). The fair value of
pension plan assets amounted to P600, 000 at the beginning of the year. The actual and expected return on
plan assets was P54, 000. The settlement rate was 9%. No gains or losses occurred in 2019 and no benefits
were paid.
4. Amortization of prior service cost was $50,000 in 2012. Amortization of net gain or loss was not required
in 2012.
Instructions:
(a) Determine the amounts of the components of pension expense that should be recognized by the company
in 2019.
(b) Prepare the journal entry or entries to record pension expense and the employer's contribution to the
pension trustee in 2019.
(c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year
2019

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