Question

Tingstad Inc. received the following information from its pension plan trustee concerning the operation of the company's defined benefit pension plan for the year ended December 31, 2020: Projected benefit obligation Market-related asset value Accumulated benefit obligation January 1, 2020 $3,500,000 1,750,000 2,700,000 December 31, 2020 $3,990,000 2,240,000 3,670,000 The service cost component for 2020 is $310,000 and the amortization of prior service cost is $240,000. The company's actual funding of the plan in 2020 amounted to $710,000. The expected (and actual) return on plan assets and the settlement rate were 8%. Instructions (a) Show a calculation of the correct pension expense to be reported in 2020.

Answer 1

Tingstad Inc. Requirement a Service cost Interest on projected benefit obligations ($3,500,000 X 8%) Expected return on plan assets ($1,750,000 x 8%) Amortization of prior service cost Pension expense-2020 310000 280000 - 140000 240000 690000 Requirement b Journal Enteries Date Particulars Pension Expense a/c Dr. Pension Asset / Liability a/c Dr. To Cash To Other Comprehensive Income (PSC) Debit in $ Credit in $ 690000 260000 710000 240000