Problem 17-12 Determine pension expense; journal entries; twoyears [LO17-3, 17-4, 17-5, 17-6, 17-7, 17-8]
The Kollar Company has a defined benefit pension plan. Pensioninformation concerning the fiscal years 2013 and 2014 are presentedbelow ($ in millions):
Information Provided by PensionPlan Actuary:
a. Projected benefit obligation asof December 31, 2012 = $2,000. b. Prior service cost from plan amendment on January 2, 2013 = $600(straight-line amortization for 10-year average remaining serviceperiod).
c. Service cost for 2013 =$560. d. Service cost for 2014 =$610. e. Discount rate used by actuary onprojected benefit obligation for 2013 and 2014 = 10%. f. Payments to retirees in 2013 =$420. g. Payments to retirees in 2014 =$490. h. No changes in actuarialassumptions or estimates. i. Net gainâAOCI on January 1, 2013= $250. j. Net gains and losses areamortized for 10 years in 2013 and 2014.
Information Provided by PensionFund Trustee:
a. Plan asset balance at fair valueon January 1, 2013 = $1,500. b. 2013 contributions = $580. c. 2014 contributions = $630. d. Expected long-term rate ofreturn on plan assets = 12%. e. 2013 actual return on planassets = $130. f. 2014 actual return on planassets = $180.
Required: 1. Calculate pension expense for 2013 and 2014. (Enter youranswers in millions rounded to 1 decimal place (i.e., 5,500,000should be entered as 5.5).)
2. Prepare the journal entries for 2013 and 2014 to record pensionexpense. (If no entry is required for a particulartransaction, select "No journal entry required" in the firstaccount field. Enter your answers in millions rounded to 1 decimalplace (i.e., 5,500,000 should be entered as 5.5).)
3. Prepare the journal entries for 2013 and 2014 to record anygains and losses and new prior service cost.(If no entry isrequired for a particular transaction, select "Nojournal entry required" in the first account field. Enter youranswers in millions rounded to 1 decimal place (i.e., 5,500,000should be entered as 5.5).)
4. Prepare the journal entries for 2013 and 2014 to record the cashcontribution to plan assets and benefit payments to retirees.(If no entry is required for a particulartransaction, select "No journal entry required" in the firstaccount field. Enter your answers in millions.(i.e., 10,000,000 should be entered as 10).)
Problem 17-12 Determine pension expense; journal entries; twoyears [LO17-3, 17-4, 17-5, 17-6, 17-7, 17-8]
The Kollar Company has a defined benefit pension plan. Pensioninformation concerning the fiscal years 2013 and 2014 are presentedbelow ($ in millions): |
| Information Provided by PensionPlan Actuary: |
| a. | Projected benefit obligation asof December 31, 2012 = $2,000. |
| b. | Prior service cost from plan amendment on January 2, 2013 = $600(straight-line amortization for 10-year average remaining serviceperiod). |
| c. | Service cost for 2013 =$560. |
| d. | Service cost for 2014 =$610. |
| e. | Discount rate used by actuary onprojected benefit obligation for 2013 and 2014 = 10%. |
| f. | Payments to retirees in 2013 =$420. |
| g. | Payments to retirees in 2014 =$490. |
| h. | No changes in actuarialassumptions or estimates. |
| i. | Net gainâAOCI on January 1, 2013= $250. |
| j. | Net gains and losses areamortized for 10 years in 2013 and 2014. |
| Information Provided by PensionFund Trustee: |
| a. | Plan asset balance at fair valueon January 1, 2013 = $1,500. |
| b. | 2013 contributions = $580. |
| c. | 2014 contributions = $630. |
| d. | Expected long-term rate ofreturn on plan assets = 12%. |
| e. | 2013 actual return on planassets = $130. |
| f. | 2014 actual return on planassets = $180. |
| Required: | |
| 1. | Calculate pension expense for 2013 and 2014. (Enter youranswers in millions rounded to 1 decimal place (i.e., 5,500,000should be entered as 5.5).) |
| 2. | Prepare the journal entries for 2013 and 2014 to record pensionexpense. (If no entry is required for a particulartransaction, select "No journal entry required" in the firstaccount field. Enter your answers in millions rounded to 1 decimalplace (i.e., 5,500,000 should be entered as 5.5).) |
| 3. | Prepare the journal entries for 2013 and 2014 to record anygains and losses and new prior service cost.(If no entry isrequired for a particular transaction, select "Nojournal entry required" in the first account field. Enter youranswers in millions rounded to 1 decimal place (i.e., 5,500,000should be entered as 5.5).) |
| 4. | Prepare the journal entries for 2013 and 2014 to record the cashcontribution to plan assets and benefit payments to retirees.(If no entry is required for a particulartransaction, select "No journal entry required" in the firstaccount field. Enter your answers in millions.(i.e., 10,000,000 should be entered as 10).) |
