Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 19, Problem 4RE
To determine
Compute the amount of pension expense of Company P for the current year.
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(Amortization of Accumulated OCI Balances) Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan.
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The average remaining service life per employee is 10.5 years. The service cost component of net periodic pension expense for employee services rendered amounted to $400,000 in 2017 and $475,000 in 2018. The accumulated OCI (PSC) on January 1, 2017, was $1,260,000. No benefits have been paid.Instructions(Round to the nearest dollar.)(a) Compute the amount of accumulated OCI (PSC) to be amortized as a component of net periodic pension expense for each of the years 2017 and 2018.(b) Prepare a schedule which reflects the amount of accumulated OCI (G/L) to be amortized as a component of pension expense for 2017 and 2018.(c) Determine the total amount of pension expense to be recognized by Keeton Company in 2017 and 2018.
At the end of Year 1. Carrot Company revised the pension benefit formula for its defined benefit pension plan to
increase benefits earned in prior years. The actuarial present value of the increased benefits is $200, the average
remaining service life of the employees affected by the change is 10 years, and Carrot will use the average
remaining service life method for this change.
Which of the following will be included in the journal entry to record prior service cost amortization in Year 2?
O Debit to pension expense for $20
O Credit to pension expense for $20
O Credit to projected benefit obligation for $20
O Debit to prior service cost for $20
Frazier Refrigeration amended its defined benefit pension plan on December 31, 2021, to increase retirement benefits earned with each service year. The consulting actuary estimated the prior service cost incurred by making the amendment retroactive to prior years to be $110,000. Frazier’s 100 present employees are expected to retire at the rate of approximately 10 each year at the end of each of the next 10 years.Required:1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense in each of the next 10 years.2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expense in each of the next 10 years.
Chapter 19 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 19 - Prob. 1GICh. 19 - Prob. 2GICh. 19 - Prob. 3GICh. 19 - Prob. 4GICh. 19 - Prob. 5GICh. 19 - Prob. 6GICh. 19 - Prob. 7GICh. 19 - Prob. 8GICh. 19 - Prob. 9GICh. 19 - Prob. 10GI
Ch. 19 - Prob. 11GICh. 19 - Prob. 12GICh. 19 - Prob. 13GICh. 19 - Prob. 14GICh. 19 - Prob. 15GICh. 19 - Prob. 16GICh. 19 - Prob. 17GICh. 19 - Prob. 18GICh. 19 - Prob. 19GICh. 19 - Prob. 20GICh. 19 - Prob. 21GICh. 19 - Prob. 22GICh. 19 - Prob. 23GICh. 19 - The actuarial present value of all the benefits...Ch. 19 - Prob. 2MCCh. 19 - Prob. 3MCCh. 19 - Prob. 4MCCh. 19 - Prob. 5MCCh. 19 - Prob. 6MCCh. 19 - Which of the following is not a component of...Ch. 19 - Prob. 8MCCh. 19 - Prob. 9MCCh. 19 - Prob. 10MCCh. 19 - Prob. 1RECh. 19 - Prob. 2RECh. 19 - Pinecone Company has plan assets of 500,000 at the...Ch. 19 - Prob. 4RECh. 19 - Prob. 5RECh. 19 - Prob. 6RECh. 19 - Prob. 7RECh. 19 - Prob. 8RECh. 19 - Given the following information for Tyler Companys...Ch. 19 - At the beginning of Year 1, Cactus Company has...Ch. 19 - Prob. 11RECh. 19 - Prob. 1ECh. 19 - Prob. 2ECh. 19 - Prob. 3ECh. 19 - Prob. 4ECh. 19 - Prob. 5ECh. 19 - Prob. 6ECh. 19 - Prob. 7ECh. 19 - Prob. 8ECh. 19 - Prob. 9ECh. 19 - Prob. 10ECh. 19 - Prob. 11ECh. 19 - Prob. 12ECh. 19 - Prob. 13ECh. 19 - Refer to the information provided in E19-13....Ch. 19 - Prob. 15ECh. 19 - Prob. 16ECh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Prob. 5PCh. 19 - Prob. 6PCh. 19 - Prob. 7PCh. 19 - Prob. 8PCh. 19 - Prob. 9PCh. 19 - Prob. 10PCh. 19 - Prob. 11PCh. 19 - Prob. 12PCh. 19 - Prob. 1CCh. 19 - Prob. 2CCh. 19 - Prob. 3CCh. 19 - Prob. 4CCh. 19 - Prob. 5CCh. 19 - Prob. 6CCh. 19 - Prob. 7CCh. 19 - Prob. 9C
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- Frazier Refrigeration amended its defined benefit pension plan on December 31, 2018, to increase retirement benefits earned with each service year. The consulting actuary estimated the prior service cost incurred by making theamendment retroactive to prior years to be $110,000. Frazier’s 100 present employees are expected to retire at therate of approximately 10 each year at the end of each of the next 10 years.Required:1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense ineach of the next 10 years.2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expensein each of the next 10 years.arrow_forwardTurner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The remaining amortization period at December 31, 20X0, for prior service cost is 5 years. The average remaining service life of employees is 11 years at January 1, 20X1, and 10 years at December 31, 20X1. The AOCI-net actuarial (gain) loss was zero at December 31, 20X0. Turner smooths recognition of its gains and losses when computing its market-related value to compute expected return. Additional Information: December 31, Description PBO 20X1 20X0 $1,450,000 $1,377,000 1,350,000 1,085,000 1,085,000 292,000 (292,000) АВО 1,425,000 1,395,000 Fair value of plan assets Market-related value of plan assets (smoothed recognition) AOCI-prior service cost Balance sheet pension asset (liability) Service cost 1,369,000 ? 117,400 169,000 113,250 Contribution PBO actuarial gain Benefit payments made None None Discount rate 5% 5% Expected rate of return 7% 7% Required: 1. Compute the amount of…arrow_forwardABC put up a qualified retirement plan approved by the BIR. It appointed B Corp. to administer the plan, which called for the payment of P200,000 to cover the retirement of employees for past services rendered and a yearly contribution of P50,000. The following amounts were paid for the first three years of the plan's operation: Contribution for Services Past Years P 100,000 60,000 40,000 Current Years First year. Second year. Third year.. P 50,000 50,000 50,000 1. The pension expense for the first year is a. P 150,000 b. Р 15,000 с. Р 60,000 d. P 105,000 2. The pension expense for the second year is a. P110,000 b. P 11,000 с. Р 56,000 d. P 66,000 3. The pension expense for the third year is а. Р 90,000 b. Р 9,000 с. Р 54,000 d. P 70,000arrow_forward
- Sheridan Corporation has a defined-benefit pension plan covering its 1140 employees. Sheridan agrees to amend its pension benefits. The prior service cost associated with the amendment is $570000. The employees are grouped according to expected years of retirement, as follows: Number of Expected Retirement Group Employees on December 31 A 210 2025 B 325 2026 C 450 2027 D 155 2028 What is the overall total number of service years to use for amortization calculations using the years of service approach? 4560 680 2830 ○ 1140arrow_forwardMethods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2019, Wolz amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. Wolz's actuary has determined that the related prior service cost amounts to $105,000 . Wolz has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service: EmployeeNumbers Expected Years ofFuture Service 1 2 2 3 3 4 4 5 Required: 1 a. Using the straight-line method, compute the average remaining service life. If required, round your answer to one decimal place.fill in the blank 598f5cf91fd1034_1 years 1 b. Using the straight-line method, prepare a schedule to amortize the prior service cost. Enter all amounts as positive…arrow_forwardBlossom, Inc. has a defined-benefit pension plan covering its 50 employees. Blossom agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2115000. Blossom determined that all its employees are expected to receive benefits under the plan over the next 5 years. In addition, 10 employees are expected to retire or quit each year. Assuming that Blossom uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the amendment is $423000. $493500. $705000. $141000.arrow_forward
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