Question

The following information relates to the contributory, defined pension plan of Klarbrun Inc. Account Balances Projected Benefit Obligation.. Plan Assets.. Accumulated OCI—Prior Service Cost... Jan. 1, 2020 $75,000 Cr. 78,750 Dr. 49,500 Dr. . Activity 2020 Service cost ........ $ 49,000 Interest cost 6,000 Prior service cost amortization. 500 Actual return on plan assets (same as expected return) 4.725 Cash funding by company 37,500 Cash funding by plan participants 10,000 Pension benefits paid to retirees 5,000 Net income... 500,000 Required a. Prepare the portion of the pension disclosure showing the components of pension expense. b. Prepare the portion of the pension disclosure showing the reconciliation of the projected benefit obligation, plan assets, and funded balance. c. Prepare the statement of comprehensive income, assuming there are no other OCI items except those related to pensions, d. Determine the ending balance in accumulated other comprehensive loss.

Answer 1

Pension accounting:

Year 2020 1 Pension Expense $ 50,775.00 2 Journal entry 2020 Account title & Explaination Debit Credit Annual pension expense 50,775 OCI-Prior Service Cost 500.00 OCI-Gain/Loss) Cash 47,500 Net Pension Asset/liability 2,775 (To record pension expense and remeasurement loss recorded) 47,500 3 Plan Asset Cash (To record the contribution made) 47,500 5,000 Net Pension Asset/liability Cash (To record benefit paid) 5,000 4 Net Pension Asset/(liability) $ 975 5 Projected benefit obligation Plan Asset Plan Surplus/(Deficit) $ $ $ (1,25,000) 1,25,975 975 $

Pension Worksheet 2020-IFRS Items Cash OCI-Prior OCI- Pension Service Cost Gain/(Loss) Asset/liability Projected benefit obligation Plan Asset $ 78,750 Balance, Jan 1, 2020 Past Service Cost created Service Cost Interest Cost Actual return Unexpected gain/ loss Amortisation of PSC Amortisation of OCI-Gain/loss Liability (increases)/ decreases Contributions Benefits (75,000) $ S (49,000) $ (6,000) $ $ S 49,500 $ $ $ $ $ (500) $ $ Actual return - Expected return Gain/(loss) 4,725$ 4,725.00 $ 4,725.00 $ 6.00% 6.00% Annual Pension Expense $ S 49,000 $ 6,000 $ (4,725) $ $ 500 $ $ $ $ $ $ 50,775$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ S $ $ $ 3,750 $ $ $ $ $ $ $ $ $ $ $ $ (2,775) $ $ 975 $ (47,500) $ $ $ (500) $ 49,500 $ 49,000 $ 10% of higher of PBO or Plan asset 47,500 OCI-Gain/(Loss) (5,000) Amount to be amortised Avg remaining service life 47,225 Amt to be included in service cost $ 5,000$ $ (50,000) $ $ (1,25,000) $ Journal entry for 2020 Accumulated OCI dec 31, 2019 Balance, December 31, 2020 (47,500) $ $ $ 1,25,975

Klarbrun company Income Statement(Partial) For the year ended December, 2020 Operating expense Service Cost $ Other Income / Expenses Pension Expense $ 50,775 Cullumber company Comprehensive Income Statement For the year ended December, 2020 $ $ 5,00,000 Net Income/loss Other Comprehensive Income/loss Amortisation of PSC $ Liability Gain $ 500 $ 500 Comprehensive Income $XXX Klarbrun company Balance Sheet(Partial) For the year ended December, 2020 Liabilities Pension Liability $ (975) Stakeholder's Equity Accumulated Other Comprehensive Income (PSC) Accumulated Other Comprehensive Income (G/L) 49,000 $ $

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