Problem I
Mangrove Corp. sponsors a defined benefit pension plan for itsemployees. On January 1, 2017, the following balances related tothis plan.
Plan assets (market-related value) $360,000
Projected benefit obligation (520,000)
Pension asset/liability (160,000).
Prior service cost 105,000
Excess Net (gain) or loss in AOCI 71,000
As a result of the operation of the plan during 2017, the actuaryprovided the following additional data at December 31, 2017.
⦠Service cost for 2017 - $94,000
⦠Settlement rate, 6%; expected return rate - 8%;Actual return rate 10%
⦠Contributions in 2017 - $80,000
⦠Benefits paid retirees in 2017 - $74,000
⦠Average remaining service life of active employees- 5years
Instructions
Using the preceding data, compute pension expense for MangroveCorp. for the year 2017 by preparing a pension worksheet that showsthe journal entry for pension expense. Use the market-related assetvalue to compute the expected return and for corridor amortization.Show the following:
⦠Your pension worksheet
⦠Your pension expense entry
⦠The computations for any part that requirescomputation, including
⦠Interest cost
⦠Expected return on plan assets
⦠Amortization of Prior service cost
⦠Amortization of Excess gains/losses in AOCI withcorridor computation
Problem I
Mangrove Corp. sponsors a defined benefit pension plan for itsemployees. On January 1, 2017, the following balances related tothis plan.
Plan assets (market-related value) $360,000
Projected benefit obligation (520,000)
Pension asset/liability (160,000).
Prior service cost 105,000
Excess Net (gain) or loss in AOCI 71,000
As a result of the operation of the plan during 2017, the actuaryprovided the following additional data at December 31, 2017.
⦠Service cost for 2017 - $94,000
⦠Settlement rate, 6%; expected return rate - 8%;Actual return rate 10%
⦠Contributions in 2017 - $80,000
⦠Benefits paid retirees in 2017 - $74,000
⦠Average remaining service life of active employees- 5years
Instructions
Using the preceding data, compute pension expense for MangroveCorp. for the year 2017 by preparing a pension worksheet that showsthe journal entry for pension expense. Use the market-related assetvalue to compute the expected return and for corridor amortization.Show the following:
⦠Your pension worksheet
⦠Your pension expense entry
⦠The computations for any part that requirescomputation, including
⦠Interest cost
⦠Expected return on plan assets
⦠Amortization of Prior service cost
⦠Amortization of Excess gains/losses in AOCI withcorridor computation
Related questions
he following defined pension data of Rydell Corp. apply to theyear 2014.
| Projected benefit obligation, 1/1/14 (before amendment) | $564,000 | ||
| Plan assets, 1/1/14 | 548,900 | ||
| Pension liability | 15,100 | ||
| On January 1, 2014, Rydell Corp., through plan amendment, grants prior service benefits having a presentvalue of | 128,900 | ||
| Settlement rate | 10 | % | |
| Service cost | 60,000 | ||
| Contributions (funding) | 74,200 | ||
| Actual (expected) return on plan assets | 59,900 | ||
| Benefits paid to retirees | 47,900 | ||
| Prior service cost amortization for 2014 | 20,200 |
For 2014, prepare a pension worksheet for Rydell Corp. that showsthe journal entry for pension expense and the year-end balances inthe related pension accounts.
