Answered: Micro Computers In

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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Question

N3.

Transcribed Image Text:Micro Computers Inc. sponsors a defined benefit pension plan for its employees. It is now the 20X2 fiscal year. Long-term corporate borrowing rates for companies with this risk profile are 4%. Information with respect to the pension plan is as follows: Current service cost for 20X2 Fair value of plan assets, 31 December 20X1 Benefits paid to retirees during 20X2 Funding payment at 1 February 20X2 Defined benefit obligation, 31 December 20X1 Past service cost from amendment dated 31 December 20X2; liability is reduced because benefits were reduced Actuarial revaluation dated 31 December 20X2; liability is increased because of changed salary increase assumptions Actual return on plan assets for 20x2 (loss) Net defined benefit pension liability. 31 December 20X1 Required: 1. Calculate the SFP net defined benefit pension llability as of 31 December 20X1. Defined benefit obligation, 31 December 20X2 Fair value of plan assets, 31 December 20X2 Net defined benefit pension liability. 31 December 20X2 2. Calculate the net defined benefit pension llability as of 31 December 20X2 by calculating the defined benefit obligation and the fair value of plan assets at 31 December 20X2. View transaction list Journal entry worksheet 1 2 3 4 5 Record the service cost for 20x2. 3. Analyze the three elements of pension accounting for 20X2: service cost, net interest, and remeasurements. Prepare entries, and also an entry for the contribution to the fund during 20x2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar.) Note: Enter debits before credits. Transaction 1 Record entry General Journal S 182,200 1,971,000 221,900 411,000 2,940,000 Clear entry (120,000) 366,200 (108,300) $ Net defined benefit pension liability, 31 December 20X2 0 Debit Credit View general Journal 4-a. Calculate the SFP net defined benefit pension llability as of 31 December 20x2, reflecting requirement 1 and the entries in requirement 3. (Round your answers to nearest whole dollar.)

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