ACCTG415 Study Guide - Quiz Guide: Maniwaki, Effective Interest Rate, Interest Expense
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Problem 20-3
Gottschalk Company sponsors a defined benefit plan for its 100employees. On January 1, 2014, the company’s actuary provided thefollowing information.
Accumulated other comprehensive loss (PSC) | $155,100 | |
Pension plan assets (fair value and market-related assetvalue) | 200,400 | |
Accumulated benefit obligation | 268,500 | |
Projected benefit obligation | 380,600 |
The average remaining service period for the participatingemployees is 10 years. All employees are expected to receivebenefits under the plan. On December 31, 2014, the actuarycalculated that the present value of future benefits earned foremployee services rendered in the current year amounted to $53,400;the projected benefit obligation was $495,500; fair value ofpension assets was $277,200; the accumulated benefit obligationamounted to $367,600. The expected return on plan assets and thediscount rate on the projected benefit obligation were both 10%.The actual return on plan assets is $11,400. The company’s currentyear’s contribution to the pension plan amounted to $65,400. Nobenefits were paid during the year.
Determine the components of pension expense that the companywould recognize in 2014.
Components of Pension Expense
Service Cost - 53,400
Interest on Projected Benefit Obligation - 38,060
Actual Return on Plan Assets - (11,400)
Unexpected Loss - (8,640)
Amortization of Gain or Loss - 0
Amortization of Prior Service Cost - 15,510
Pension Expense - 86,930
Prepare the journal entry to record the pension expense and thecompany’s funding of the pension plan in 2014
Other Comprehensive Income (G/L) -
Pension Expense -
Cash -
Pension Asset/Liability -
Other Comprehensive Income (PSC) -
Compute the amount of the 2014 increase/decrease in gains orlosses and the amount to be amortized in 2014 and 2015.
2014 Increase/Decrease in _____________ $_____________
Amortization in 2014
Amortization in 2015
Indicate the pension amounts reported in the financial statementas of December 31, 2014.
Gottschalk Company Income Statement (Partial) For the year endedDcember 31, 2014
$ |
Gottschalk Company Comprehensive Income Statement December 31,2014
Gottschalk company Balance Sheer (Partial) December 31, 2014
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 gain—AOCI 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).) |