Pension Question (30 marks)Sophia Consultants Inc. has had a defined benefit pension plan since January 1, 2018.The following represents beginning balances as at January 1, 2022:Plan Asset $1,155,300; Defined Benefit Obligation $1,275,000; Net Pension Liability $119,700Additional Information is as follows for 2022:Current Service cost is $186,000 for 2022Company Funding/Contribution is $200,000 for 2022. Funding is made on December 31 of each year.Actual return on assets is $55,900 for 2022.There is an increase in obligation for $29,000 due to changes in Actuarial assumptions at Dec 31, 2022.There are payments made equal to $80,000 per year to retired employees in 2022 (payments to retireesare made at the end of the year on December 31).Past service cost of $85,900 from plan amendment dated December 31, 2022: liability is increasedbecause benefits were increased on a retroactive basis.For 2022, the assumed interest rate is 6%. Assume IFRS.Required:1. Determine Defined Benefit Obligation, Pension Asset, Pension Expense, AOCI, and NetPension Asset/Liability for 2022. Prepare a spreadsheet to determine all these pension items.2. Prepare the required journal entries for 2022 3. Prepare a partial balance sheet and a partial income statement for 2022

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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Pension Question (30 marks)
Sophia Consultants Inc. has had a defined benefit pension plan since January 1, 2018.
The following represents beginning balances as at January 1, 2022:
Plan Asset $1,155,300; Defined Benefit Obligation $1,275,000; Net Pension Liability $119,700
Additional Information is as follows for 2022:
Current Service cost is $186,000 for 2022
Company Funding/Contribution is $200,000 for 2022. Funding is made on December 31 of each year.
Actual return on assets is $55,900 for 2022.
There is an increase in obligation for $29,000 due to changes in Actuarial assumptions at Dec 31, 2022.
There are payments made equal to $80,000 per year to retired employees in 2022 (payments to retirees
are made at the end of the year on December 31).
Past service cost of $85,900 from plan amendment dated December 31, 2022: liability is increased
because benefits were increased on a retroactive basis.
For 2022, the assumed interest rate is 6%. Assume IFRS.
Required:
1. Determine Defined Benefit Obligation, Pension Asset, Pension Expense, AOCI, and Net
Pension Asset/Liability for 2022. Prepare a spreadsheet to determine all these pension items.
2. Prepare the required journal entries for 2022
3. Prepare a partial balance sheet and a partial income statement for 2022

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