INTERM.ACCT.:REPORTING...-CENGAGENOWV2
3rd Edition
ISBN: 9781337909358
Author: WAHLEN
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 19, Problem 6E
1.
To determine
Calculate the amount of projected benefit obligation of Company L for 2019.
2.
To determine
Explain the manner in which a decrease in the discount rate would affect pension expense of Company L.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On December 31, 2019, Berry Company determined that the 2019 service cost on its defined benefit pension plan was $140,000. At the beginning of 2019, Berry had pension plan assets of $510,000 and a projected benefit obligation of $700,000. Its discount rate (and expected long-term rate of return on plan assets) for 2019 was 10%. There are no other components of Berry's pension expense; the company had an accrued/prepaid pension cost liability at the end of 2018.
Required:
1.
Compute the amount of Berry's pension expense for 2019.
2.
Prepare the journal entry to record Berry's 2019 pension expense if it funds the pension plan in the amount of (a) $159,000 and (b) $140,000.
On December 31, 2019, Palmer Company determined that the 2019 service cost on its defined benefit pension plan was $130,000. At the beginning of 2019, Palmer had pension plan assets of $520,000 and a projected benefit obligation of $700,000. Its discount rate (and expected long-term rate of return on plan assets) for 2019 was 10%. There are no other components of Palmer’s pension expense; the company had an accrued/prepaid pension cost liability at the end of 2018.
Required:
1.
Compute the amount of Palmer’s pension expense for 2019.
2.
Prepare the journal entry to record Palmer’s 2019 pension expense if it funds the pension plan in the amount of (a) $148,000 and (b) $130,000.
Cullumber Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for
2025 and 2026.
Plan assets (fair value), December 31
Projected benefit obligation, January 1
Pension asset/liability, January 1
Prior service cost, January 1
Service cost
Actual and expected return on plan assets
Amortization of prior service cost
Contributions (funding)
Accumulated benefit obligation, December 31
Interest/settlement rate
No benefits were paid in 2025 or 2026.
(a)
Compute pension expense for 2025 and 2026.
Pension expense for 2025
Pension expense for 2026
$
$
2025
$873,750
875,000
175,000 Cr.
312,500
75,000
30,000
12,500
143,750
625,000
9%
2026
$1,061,250
1,000,000
?
300,000
112,500
37,500
15,000
150,000
687,500
9%
Chapter 19 Solutions
INTERM.ACCT.:REPORTING...-CENGAGENOWV2
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A partially completed pension spreadsheet showing the relationships among the elements that constitute Carney, Inc.'s defined benefit pension plan follows. Six years earlier, Carney revised its pension formula and recalculated benefits earned by employees in prior years using the more generous formula. The prior service cost created by the recalculation is being amortized at the rate of $5 million per year. At the end of 2021, the pension formula was amended again, creating an additional prior service cost of $40 million. The expected rate of return on assets and the actuary's discount rate were 10%, and the average remaining service life of the active employee group is 10 years. Required: Fill in the missing amounts. Prepare the 2021 journal entry to record pension expense. Prepare the journal entry(s) to record any 2021 gains and losses and new prior service cost in 2021. Prepare the 2021 journal entries to record (a) the cash contribution to plan assets and (b) the payment of…arrow_forwardCompany G offers a defined benefit pension plan to its employees. At December 31, 2018, the present value of the defined benefit obligation of the pension plan was $7,800,000 and the fair value of the plan assets was $8,000,000. Information pertaining to the pension plan in 2019 follows: The actuary advised that current service cost was $900,000. The discount rate used in actuarial assumptions was 5%. On June 1, 2019, Company G retroactively improved the benefits under the plan to January 1, 2019. The cost of this improvement was determined by the plan actuary to be $975,000. Benefits paid to retirees on July 1, 2019 were $750,000. Company G contributed $675,000 to the pension plan on March 1, 2019. The present value of the defined benefit obligation at December 31, 2019, was $8,125,000. The fair market value of plan assets as at December 31, 2019, was $8,375,000. • Company G has a December 31 year end. Required: • Prepare the worksheet and journal entries for 2019 using IFRS. •…arrow_forwardShamrock Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances related to this plan. Plan assets (market-related value) $565,000 Projected benefit obligation 656,000 Pension asset/liability 91,000 Cr. Prior service cost 86,000 Net gain or loss (debit) 92,000 As a result of the operation of the plan during 2020, the actuary provided the following additional data for 2020. Service cost $98,000 Settlement rate, 9%; expected return rate, 10% Actual return on plan assets 50,000 Amortization of prior service cost 26,000 Contributions 126,000 Benefits paid retirees 92,000 Average remaining service life of active employees 10 years Using the preceding data, compute pension expense for Shamrock Corp. for the year 2020 by preparing a pension worksheet that shows the journal entry for pension expense. (Enter all amounts as positive.)arrow_forward
- TAN Company has a defined benefit pension plan for its employees. The plan has been in existence for several years. During 2018, for the first time, TAN experienced a difference between its expected and actual projected benefit obligation. This resulted in a cumulative “experience” loss of $29,000 at the end of 2018, which it recorded and which did not change during 2019. TAN amortizes any excess loss by the straight-line method over the average remaining service life of its active participating employees. It has developed the following schedule concerning these 40 employees: Employee Numbers Expected Years of Future Service Employee Numbers Expected Years of Future Service 1–5 3 21–25 15 6–10 6 26–30 18 11–15 9 31–35 21 16–20 12 36–40 24 TAN makes its contribution to the pension plan at the end of each year. However, it has not always funded the entire pension expense in a given year. As a result, it had an accrued…arrow_forwardSandhill Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2025, the following balances relate to this plan. Plan assets Projected benefit obligation Pension asset/lability Accumulated OCI (PSC) (a) As a result of the operation of the plan during 2025, the following additional data are provided by the actuary. Service cost Settlement rate, 9% Actual return on plan assets Amortization of prior service cost Expected returson plan assets Unexpected loss from change in projected benefit obligation due to change in actuarial predictions Contributions Benentspaid retirees items Balance, Jan 1, 2025 Service cost $496,400 610,800 interest cost 114400 Actual return 98,000 Dr. Unexpected gain Using the data above, compute pension expense for Sandhill. for the year 2025 by preparing a pension worksheet. (Enter all amounts as positive.) $90.900 54,700 18.300 51.600 76.600 103.700 85,200 Annual Pension Expense C Cath SUPPORTarrow_forwardBeale Management has a noncontributory, defined benefit pension plan. On December 31, 2024 (the end of Beale's fiscal year), the following pension-related data were available: Projected Benefit Obligation Balance, January 1, 2024 Service cost Interest cost, discount rate, 5% Gain due to changes in actuarial assumptions in 2024 Pension benefits paid Balance, December 31, 2024 Plan Assets ($ in millions) $ 740 76 37 (21) (37) $ 795 ($ in millions) $ 760 47 (Expected return on plan assets, $52) 88 Pension benefits paid (37) Balance, December 31, 2024 $ 858 January 1, 2024, balances: ($ in millions) Pension asset $ 20 Balance, January 1, 2024 Actual return on plan assets Cash contributions Prior service cost-AOCI (amortization $7 per year) Net gain-AOCI (any amortization over 10 years) Required: 1. to 3. Prepare the journal entries required for the pension during 2024. 35 116 4. Determine the balances at December 31, 2024, in the net gain-AOCI, and prior service cost-AOCI. [Hint: You might…arrow_forward
- Godoarrow_forwardJay Company has had a defined benefit pension plan for several years. At the beginning of 2019, Jay amended the plan; this amendment provided for increased benefits to employees based on services rendered in prior periods. The prior service cost related to this amendment totaled $88,000. As a result, the projected benefit obligation increased. Jay decided not to fund the increased obligation at the time of the amendment, but rather to increase its periodic year-end contributions to the pension plan. The following information for 2019 has been provided by Jay’s actuary and funding agency and obtained from a review of its accounting records: Projected benefit obligation (12/31) $808,090 Service cost 183,000 Discount rate 9% Cumulative net loss (1/1) 64,500 Company contribution to pension plan (12/31) 200,000 Projected benefit obligation (1/1)* 513,000 Plan assets, fair value (12/31) 698,000 Accrued pension cost (liability) (1/1) 33,000* Expected (and actual) return…arrow_forwardScott Hobson Enterprises has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $75.000; service cost, $14,000; interest cost, $6,000; benefits paid for the year, $9,000; ending PBO, $89,000; and the expected return on plan assets, $10.000. There were no other pension-related costs. The journal entry to record the annual pension costs will include a debit to pension expense for: Multiple Choice $20,000. $12,000. $10,000. $15,000. 17 of 39 Next > Prev Show Question no....pages df Question no....pages MacBook Air ...arrow_forward
- Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2024 (the end of Beale's fiscal year), the following pension-related data were available: Projected Benefit Obligation Balance, January 1, 2024 Service cost Interest cost, discount rate, 5% Gain due to changes in actuarial assumptions in 2024 Pension benefits paid Balance, December 31, 2024 ($ in millions) $ 480 82 24 (10) (40) $ 536 Plan Assets ($ in millions) Balance, January 1, 2024 $ 500 Actual return on plan assets 40 (Expected return on plan assets, $45) Cash contributions 70 Pension benefits paid (40) Balance, December 31, 2024 $ 570 January 1, 2024, balances: ($ in millions) $ 20 48 80 Pension asset Prior service cost-AOCI (amortization $8 per year) Net gain-AOCI (any amortization over 15 years) Required: 1. to 3. Prepare the journal entries required for the pension during 2024. 4. Determine the balances at December 31, 2024, in the net gain-AOCI, and prior service cost-AOCI. [Hint: You might…arrow_forwardDavison Company has a noncontributory defined benefit pension plan for its employees. During 2019, the pension plan has a discount rate of 8%, service cost of $98,000, plan assets as of 1/1/19 of $432,000, and an expected return on plan assets of $34,560. On December 31, 2019, Davison contributed $90,000 to the pension plan, resulting in a credit to Accrued/Prepaid Pension Cost of $6,300. What is the amount of the projected benefit obligation on January 1, 2019? a. $410,750 b. $345,600 c. $332,000 d. $432,000arrow_forwardThe Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2021 and 2022 are presented below ($ in millions): Information Provided by Pension Plan Actuary: a. Projected benefit obligation as of December 31, 2020 = $3,650. b. Prior service cost from plan amendment on January 2, 2021 = $750 (straight-line amortization for 10-year average remaining service period). c. Service cost for 2021= $670. d. Service cost for 2022 = $720. e. Discount rate used by actuary on projected benefit obligation for 2021 and 2022 = 10%. f. Payments to retirees in 2021 = $530. g. Payments to retirees in 2022 = $600. h. No changes in actuarial assumptions or estimates. i. Net gain-AOCI on January 1, 2021 = $455. j. Net gains and losses are amortized for 10 years in 2021 and 2022. Information Provided by Pension Fund Trustee: a. Plan asset balance at fair value on January 1, 2021 = $2,60O. b. 2021 contributions = $690. c. 2022 contributions = $740. d. Expected…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT