Chapter 17, Problem 17.9P

(1)

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

To determine: Pension expense at the end of 2016.

(2)

To determine

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To determine: PBO at the end of 2016

(3)

To determine

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

To determine: The pension plan assets at the end of 2016

(4)

To determine

Net pension asset or net pension liability: The net totals of PBO and pension plan assets are reported as net pension asset or net pension liability. Net pension asset is reported, if the net balance is a debit. Net pension liability is reported, if the net balance is a credit.

To determine: The net pension asset (liability) at the end of 2016.

(5)

To determine

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
• Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: Entries related to net pension expense, funding, and retiree benefits paid in 2016.