The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2021 and 2022 are presented below ($ in millions): Information Provided by Pension Plan Actuary: Projected benefit obligation as of December 31, 2020 = $2,900. Prior service cost from plan amendment on January 2, 2021 = $500 (straight-line amortization for 10-year average remaining service period). Service cost for 2021 = $620. Service cost for 2022 = $670. Discount rate used by actuary on projected benefit obligation for 2021 and 2022 = 10%. Payments to retirees in 2021 = $480. Payments to retirees in 2022 = $550. No changes in actuarial assumptions or estimates. Net gain—AOCI on January 1, 2021 = $360. Net gains and losses are amortized for 10 years in 2021 and 2022. Information Provided by Pension Fund Trustee: Plan asset balance at fair value on January 1, 2021 = $2,100. 2021 contributions = $640. 2022 contributions = $690. Expected long-term rate of return on plan assets = 12%. 2021 actual return on plan assets = $190. 4. Prepare the journal entries for 2021 and 2022 to record (a) the cash contribution to plan assets and (b) the benefit payments to retirees.
The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2021 and 2022 are presented below ($ in millions): Information Provided by Pension Plan Actuary: Projected benefit obligation as of December 31, 2020 = $2,900. Prior service cost from plan amendment on January 2, 2021 = $500 (straight-line amortization for 10-year average remaining service period). Service cost for 2021 = $620. Service cost for 2022 = $670. Discount rate used by actuary on projected benefit obligation for 2021 and 2022 = 10%. Payments to retirees in 2021 = $480. Payments to retirees in 2022 = $550. No changes in actuarial assumptions or estimates. Net gain—AOCI on January 1, 2021 = $360. Net gains and losses are amortized for 10 years in 2021 and 2022. Information Provided by Pension Fund Trustee: Plan asset balance at fair value on January 1, 2021 = $2,100. 2021 contributions = $640. 2022 contributions = $690. Expected long-term rate of return on plan assets = 12%. 2021 actual return on plan assets = $190. 4. Prepare the journal entries for 2021 and 2022 to record (a) the cash contribution to plan assets and (b) the benefit payments to retirees.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2021 and 2022 are presented below ($ in millions):
Information Provided by Pension Plan Actuary:
- Projected benefit obligation as of December 31, 2020 = $2,900.
- Prior service cost from plan amendment on January 2, 2021 = $500 (straight-line amortization for 10-year average remaining service period).
- Service cost for 2021 = $620.
- Service cost for 2022 = $670.
- Discount rate used by actuary on projected benefit obligation for 2021 and 2022 = 10%.
- Payments to retirees in 2021 = $480.
- Payments to retirees in 2022 = $550.
- No changes in actuarial assumptions or estimates.
- Net gain—AOCI on January 1, 2021 = $360.
- Net gains and losses are amortized for 10 years in 2021 and 2022.
Information Provided by Pension Fund Trustee:
- Plan asset balance at fair value on January 1, 2021 = $2,100.
- 2021 contributions = $640.
- 2022 contributions = $690.
- Expected long-term
rate of return on plan assets = 12%. - 2021 actual return on plan assets = $190.
4. Prepare the
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