Calculations Shown

Question 1

The following information is available for the pension plan of Radcliffe Company for the year 2014.

Actual and expected return on plan assets

Benefits paid to retirees

Contributions (funding)

Interest/discount rate

Prior service cost amortization

Projected benefit obligation, January 1, 2014

Service cost

 

 

Compute pension expense for the year 2014.

Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

 

Question 2

The following facts apply to the pension plan of Boudreau Inc. for the year 2014.

Plan assets, January 1, 2014      $490,000

Projected benefit obligation, January 1, 2014      $490,000

Settlement rate     8 %

Service cost      $40,000

Contributions (funding)      $25,000

Actual and expected return on plan assets      $49,700

Benefits paid to retirees      $33,400

 

Using the preceding data, compute pension expense for the year 2014. As part of your solution, prepare a pension worksheet that shows the journal entry for pension expense for 2014 and the year-end balances in the related pension accounts.

 

 

Question 3

Gingrich Importers provides the following pension plan information.

Fair value of pension plan assets, January 1, 2014     $2,400,000

Fair value of pension plan assets, December 31, 2014     $2,725,000

Contributions to the plan in 2014     $280,000

Benefits paid retirees in 2014     $350,000

 

From the data above, compute the actual return on the plan assets for 2014

Kenseth Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values for its pension plan assets.

 

 

 

 

 

Projected  Plan

Benefit  Assets

Obligation  Value

2013  2,000,000  1,900,000

2014  2,400,000  2,500,000

2015  2,950,000  2,600,000

2016  3,600,000  3,000,000

 

The average remaining service life per employee in 2013 and 2014 is 10 years and in 2015 and 2016 is 12 years. The net gain or loss that occurred during each year is as follows: 2013, $280,000 loss; 2014, $90,000 loss; 2015, $11,000 loss; and 2016, $25,000 gain.

 

 

Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule.

 

 

Question 5

The actuary for the pension plan of Gustafson Inc. calculated the following net gains and losses.

Incurred during the Year  (Gain) or Loss

2014   $300,000

2015   $480,000

2016   $(210,000)

2017   $(290,000)

 

Other information about the company’s pension obligation and plan assets is as follows.

As of January 1,  Projected Benefit  Plan Assets

Obligation  (market-related asset value)

2014   $4,000,000    $2,400,000

2015   $4,520,000    $2,200,000

2016   $5,000,000    $2,600,000

2017   $4,240,000    $3,040,000

 

Gustafson Inc. has a stable labor force of 400 employees who are expected to receive benefits under the plan. The total service-years for all participating employees is 5,600. The beginning balance of accumulated OCI (G/L) is zero on January 1, 2014. The market-related value and the fair value of plan assets are the same for the 4-year period. Use the average remaining service life per employee as the basis for amortization.

 

 

 

 

Compute the minimum amount of accumulated OCI (G/L) amortized as a component of net periodic pension expense for each of the years 2014, 2015, 2016, and 2017. Apply the “corridor” approach in determining the amount to be amortized each year. (Round answers to 0 decimal places, e.g. 2,500.)

 

 

Question 6

Webb Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2014, the following balances relate to this plan.

Plan assets      $480,000

Projected benefit obligation      $600,000

Pension asset/liability      $120,000

Accumulated OCI (PSC)      $100,000  Dr.

 

As a result of the operation of the plan during 2014, the following additional data are provided by the actuary.

Service cost      $90,000

Settlement rate, 9%

Actual return on plan assets      $55,000

Amortization of prior service cost     19,000

Expected return on plan assets     52,000

Unexpected loss from change in projected benefit obligation,     76,000

due to change in actuarial predictions

Contributions     99,000

Benefits paid retirees     85,000

 

Using the data above, compute pension expense for Webb Corp. for the year 2014 by preparing a pension worksheet

Prepare the journal entry for pension expense for 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

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