The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are presented below ($ in millions) Information Provided by Pension Plan Actuary. a. Projected benefit obligation as of December 31, 2023 - $3,350. b. Prior service cost from plan amendment on January 2, 2024 $650 (straight-line amortization for 10-year average remaining service period). c. Service cost for 2024 $650. d. Service cost for 2025 $700. e. Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10% f. Payments to retirees in 2024 $510. g. Payments to retirees in 2025-$580. h. No changes in actuarial assumptions or estimates. I Net gain-AOCI on January 1, 2024 = $375. J. Net gains and losses are amortized for 10 years in 2024 and 2025. Information Provided by Pension Fund Trustee a. Plan asset balance at fair value on January 1, 2024 = $2,400. b. 2024 contributions - $670. c. 2025 contributions $720. d. Expected long-term rate of return on plan assets = 12% e. 2024 actual return on plan assets $220. f 2025 actual return on plan assets = $270. Required: 1. Calculate pension expense for 2024 and 2025. 2. Prepare the journal entries for 2024 and 2025 to record pension expense. 3. Prepare the journal entries for 2024 and 2025 to record any gains and losses and new prior service cost 4. Prepare the journal entries for 2024 and 2025 to record (a) the cash contribution to plan assets and (b) the benefit payments to retirees.
The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are presented below ($ in millions) Information Provided by Pension Plan Actuary. a. Projected benefit obligation as of December 31, 2023 - $3,350. b. Prior service cost from plan amendment on January 2, 2024 $650 (straight-line amortization for 10-year average remaining service period). c. Service cost for 2024 $650. d. Service cost for 2025 $700. e. Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10% f. Payments to retirees in 2024 $510. g. Payments to retirees in 2025-$580. h. No changes in actuarial assumptions or estimates. I Net gain-AOCI on January 1, 2024 = $375. J. Net gains and losses are amortized for 10 years in 2024 and 2025. Information Provided by Pension Fund Trustee a. Plan asset balance at fair value on January 1, 2024 = $2,400. b. 2024 contributions - $670. c. 2025 contributions $720. d. Expected long-term rate of return on plan assets = 12% e. 2024 actual return on plan assets $220. f 2025 actual return on plan assets = $270. Required: 1. Calculate pension expense for 2024 and 2025. 2. Prepare the journal entries for 2024 and 2025 to record pension expense. 3. Prepare the journal entries for 2024 and 2025 to record any gains and losses and new prior service cost 4. Prepare the journal entries for 2024 and 2025 to record (a) the cash contribution to plan assets and (b) the benefit payments to retirees.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Required 4
Calculate pension expense for 2024 and 2025.
Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate calculations. Enter you
answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).
($ in millions)
2024
2025
Service cost
650.0$
700.0
Interest on PBO
335.0
383.0
Expected return
(288.0)
(334.0) (
Amortization of prior service cost
65.0
65.0
Amortization of net gain
(4.0)
0.0 ×
Pension expense
$
758.0
$
814.0
<Required 1
Required 2 >
Transcribed Image Text:The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are
presented below ($ in millions):
Information Provided by Pension Plan Actuary:
a. Projected benefit obligation as of December 31, 2023 = $3,350.
b. Prior service cost from plan amendment on January 2, 2024 = $650 (straight-line amortization for 10-year average remaining service
period).
c. Service cost for 2024 = $650.
d. Service cost for 2025 = $700.
e. Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10%.
f. Payments to retirees in 2024 $510.
g. Payments to retirees in 2025 $580.
h. No changes in actuarial assumptions or estimates.
1. Net gain-AOCI on January 1, 2024 = $375.
J. Net gains and losses are amortized for 10 years in 2024 and 2025.
Information Provided by Pension Fund Trustee:
a. Plan asset balance at fair value on January 1, 2024 = $2,400.
b. 2024 contributions $670.
c. 2025 contributions $720.
d. Expected long-term rate of return on plan assets = 12%
e 2024 actual return on plan assets $220.
f 2025 actual return on plan assets = $270.
Required:
1. Calculate pension expense for 2024 and 2025.
2. Prepare the journal entries for 2024 and 2025 to record pension expense.
3. Prepare the journal entries for 2024 and 2025 to record any gains and losses and new prior service cost.
4. Prepare the journal entries for 2024 and 2025 to record (a) the cash contribution to plan assets and (b) the benefit payments to
retirees.
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Step 1: Define pension expense:
VIEWStep 2: 1. Calculate pension expenses:
VIEWStep 3: 2. Prepare the journal entries to record pension expense as follows:
VIEWStep 4: 3. Prepare the journal entry to record gain or loss as follows:
VIEWStep 5: 4. Prepare the journal entries to record the cash contributions as follows:
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