Question

USE THE FOLLOWING INFORMATION FOR # 11-20 Interest (Cost) Rate Expected rate of return on plan assets Actual rate of return on plan assets Beginning of year balance in CASH $ 120,000 Projected benefit obligation at the beginning of 2017 Service cost, 2017 Interest Cost Loss (gain) on PBO for assumption changes Less: Benefits paid to retirees during the year $ $ 350,000 40.000 S 3,500 (45,000) Projected benefit obligation at the end of 2017 $ 250,000 Plan assets at the beginning of the year Actual return on plan assets Cash contributions to the pension plan in 2017 Less: Benefits paid to retirees during the year $ 44,000 Plan assets at the end of 2017 Additional information reported from the actuary and plan trustee: $ $ 40,000 43,750 4 years 30,000 $ Prior Service Costs incurred beginning of 2016 Beginning of year balance in AOCI for Net Loss Average remaining service years of employees Beginning of year balance in AOCI for PSC Amortization of PSC Amortization of net loss Expected return on plan assets

Answer 1

Interest (Cost) rate	3%
Expected rate of return on plan assets	3%
Actual rate of return on plan assets	4%
Beginning of year balance in cash	$      120,000
Projected benefit obligation at the beginning of 2017	$      350,000
Service cost	$        40,000
Interest cost [Interest (Cost) rate * Beginning PBO](350000*3%)	$        10,500
Loss (gain) on PBO	$          3,500
Less: Benefits paid to retirees	$      (45,000)
Projected benefit obligation at the end of 2017	$      359,000
Plan assets at the beginning of the year	$      250,000
Actual return on plan assets [Beginning plan assets * Actual rate of return ](250000*4%)	$        10,000
Cash contribution to plan assets	$        44,000
Less: Benefits paid to retirees	$      (45,000)
Plan assets at the end of the year	$      259,000
Prior service Cost incurred beginning of 2016	$        40,000
Beginning of year balance in AOCI for net loss	$        43,750
Average remaining service years of employees	4
Beginning of year balance in AOCI for PSC	$        30,000
Amortization of PSC [Beginning AOCI for PSC / Average remaining service years ](30000/4)	$          7,500
Amortization of net loss [Check below]	$    2,187.50
Expected return on plan assets [Beginning plan assets * Expected rate of return ](250000*3%)	$          7,500
Projected benefit obligation at the beginning of 2017	$      350,000
Plan assets at the beginning of the year	$      250,000
Which ever is higher from above	$      350,000
10% of higher amount as per Corridor rule (350000*10%)	$        35,000
Accumulated OCI- net loss at beginning	$        43,750
Less: 10% of higher amount as per Corridor rule	$        35,000
Excess at beginning	$          8,750
Divided by: Average remaining service life in years	4
Amortization of net loss - AOCI	$    2,187.50

Answer	Accounts titles	Debit	Credit
14	Net plan assets (liability)	$          2,500
	OCI - Gain		$        2,500
	To record the adjustment for gain on plan assets.
15	Pension expense	$          7,500
	OCI - Prior service cost		$        7,500
	To record the amortization of prior service cost

Actual return on plan assets	$        10,000
Less: Expected return on plan assets	$          7,500
Asset gain	$          2,500