Question

Riverbed Company received the following selected information from its pension plan trustee concerning the operation of the company’s defined benefit pension plan for the year ended December 31, 2017.

		January 1, 2017		December 31, 2017
Projected benefit obligation		$1,523,000		$1,550,000
Market-related and fair value of plan assets		794,000		1,128,400
Accumulated benefit obligation		1,597,000		1,716,400
Accumulated OCI (G/L)—Net gain		0		(202,300	)

The service cost component of pension expense for employee services rendered in the current year amounted to $77,000 and the amortization of prior service cost was $119,400. The company’s actual funding (contributions) of the plan in 2017 amounted to $255,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,194,000 on January 1, 2017. Assume no benefits paid in 2017.

Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Riverbed Company for the year 2017.

Riverbed Company Income Statement (Partial) December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017
DividendsExpensesNet Income / (Loss)Retained Earnings – January 1, 2017Retained Earnings – December 31, 2017RevenuesTotal ExpensesTotal Revenues
Amortization of PSC    Interest Expense    Pension Expense    Rent Expense    Service Cost		$

Riverbed Company Comprehensive Income Statement December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017
DividendsExpensesNet Income / (Loss)Retained Earnings – January 1, 2017Retained Earnings – December 31, 2017RevenuesTotal ExpensesTotal Revenues		$XXXX
Amortization of PSCComprehensive IncomeInterest ExpenseLiability GainPension ExpenseRent ExpenseService CostOther Comprehensive Income (Loss)
Amortization of PSC    Comprehensive Income    Interest Expense    Liability Gain    Pension Expense    Rent Expense    Service Cost    Other Comprehensive Income (Loss)	$
Amortization of PSC    Comprehensive Income    Interest Expense    Liability Gain    Pension Expense    Rent Expense    Service Cost    Other Comprehensive Income (Loss)
Amortization of PSCComprehensive IncomeInterest ExpenseLiability GainPension ExpenseRent ExpenseService CostOther Comprehensive Income (Loss)		$XXXX

Riverbed Company Balance Sheet (Partial) December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017
Current AssetsLiabilitiesIntangible AssetsProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Property, Plant and EquipmentTotal Stockholders' Equity
Accounts Payable    Accounts Receivable    Accumulated Depreciation    Accumulated Other Comprehensive Income (G/L)    Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Income (PSC)    Accumulated Other Comprehensive Loss (PSC)    Common Stock    Pension Liability    Retained Earnings			$
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
Accounts Payable    Accounts Receivable    Accumulated Depreciation    Accumulated Other Comprehensive Income (G/L)    Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Income (PSC)    Accumulated Other Comprehensive Loss (PSC)    Common Stock    Pension Liability    Retained Earnings			$
Accounts Payable    Accounts Receivable    Accumulated Depreciation    Accumulated Other Comprehensive Income (G/L)    Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Income (PSC)    Accumulated Other Comprehensive Loss (PSC)    Common Stock    Pension Liability    Retained Earnings

Answer 1

Riverbed Company Components of Pension Expense Service Cost Interest on Projected Benefit Obligation Expected Return on Plan Assets Amortization of Prior Service Cost 77000 152300 1523000 x 10% -79400 794000 x 10% 119400 269300 Journal Entry Particulars Debit in $ Credit in $ Pension Expense a/c Dr. 269300 Pension Asset Liability a/c Dr. 307400 To Cash 255000 To Other Comprehensive Income (PSC) 119400 To Other Comprehensive Income (G/L) 202300 (To record pension expense and employer's contribution) Income Statement For the period ending 31.12.2017 Pension Expense 269300 XXXX Comprehensive Income Statement For the period ending 31.12.2017 Net Income/(Loss) Other Comprehensive Income(loss) Liability Gain Amortization (PSC) 202300 119400 321700 Comprehensive Income XXXX Balance sheet (Partial) As at 31.12.2017 Liabilities Pension Liability Stockholders Equity Accumulated Other Comprehensive Income (PSC) Accumulated Other Comprehensive Income(G/L) 421600 1074600 202300 1550000 - 1128400 = 421600 1194000 - 119400 = 1074600