Question

Pension

Complete the following.

Scottsdale Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances relate to this plan.

Plan assets	$480,000
Projected benefit obligation	625,000
Accumulated OCI (PSC)	100,000 Dr.
Accumulated OCI (Gain/Loss)	85,000 Cr.

As a result of the operation of the plan during 2017, the following additional data are provided by the actuary:

Service cost for 2017	$90,000
Settlement rate	9%
Actual return on plan assets in 2017	57,000
Expected return on plan assets	10%
Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions	76,000
Contributions in 2017	99,000
Benefits paid retirees in 2017	85,000
Avg. remaining service life (all employees)	12 years

1. Prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss.
2. Prepare the journal entry to record pension expense in 2017.
3. Indicate the reporting of the 2017 pension amounts in the income statement and balance sheet
4. What is the amount of deferred pension gain or loss that the company will carry forward to 2018?

Compute the same items as in (#1), assuming that the expected rate of return is 14% and the Accumulated OCI (Gain/Loss) is a Debit balance at January 1, 2017.

Answer 1

Solution : . Given data Scottsdale Corp; Sponsors a delined benefit plon for its employees. on January 1, 2017, the balances relate to this plan. .. pension following a) pension work sheet (2017) . Items: Annval pension | cast expense Oc7 I prior seivice COS pian assets Oc: Going Pension Projected ASSeni Benefit . Losses ! Cliability) obligation 145.000 625,000 $80,000 Bonce January 1,2017 a) Service cost 90,000 b) Intemet cost 56250 C) Expected / 90.000 56,250 57000 actualyeler 57000 dy Unexpected 9000 gain 9000 e) Contributions 99000. 99000 85,000 K 86000) (f) Benefit paid to retires 9) Unexpected loss from change in PBO 76000 76000

Journal entry for 2017 98250 99000 67000 66250 Accomolated och 1/1/2017 100.000 (85000) Baionce Dec 31, 2017. 100,000 (18000) (211,950) 1762,250) 551,00 projected benefit obligation : 625.000 Settlement rates 91%. interest: Cost = 625000 x 97. = 625000 x Do -625000 0.09 - 56250" plan ossets is PUDEN 4180.000 Expected yeturn on plan assets 10% Expected Retorn 480000 X 1oy. =48000 val retorn on plon assets in 2017 is 57,000 un expected gain - 57,000 -418000 - 9000

on the pension Worksheet, Compote pension expense, pension asset liability, of 98a50 will be reported in income * pension expense Statement Pension expense - 98250 oc? - Geinlooss - 67000 Cash = 99000 Pension lioblity = 66250 . * pain of 18000 will be carried forward to 2018 Tlems Annual Pension | Cash l expense prioy. Service Cost OCI: (Gains) // Pension AS sect Losses liability Projected plan benefit asseck obligation . 145,000 625,000 480,000 90,000 Baronce Jan 1, 2017 a) Service Cost 90,000 bi Interest I cost 56250 () expected/ actoalsetom 5 7000 d) unexpected loss. 10200 e) Contributions 57000 10200 99000 99000

85000 85000 f) Benefit paid to retires 9) unexpected loss from change in PBO 76000 -76000 Journal entry for 2012 79050 990000 86200 66,250 Accumulated och 1/2017 100,000 85000 Baronce Dec 31 2017 100.000 17.200 211250 762,250 551000 Expected return = 180000 xul. = U80000 x 14 סטן - 67200 Un expected LOSS 67 aod -57000 . ....10200