Question

Part IV: Watt Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances relate to this plan. Plan assets 4,316,000 Projected benefit obligation 4,300,000 Prior service cost (OCT) 840,000 Accumulated OCI - Loss 656,000 As a result of the operation of the plan during 2017, the following additional data are provided by the actuary. Service cost for 2017 523,000 Settlement & expected return rate 10% Actual return on planets 510,000 Average service life of all covered employees in years PBO on Dec 31, 2017, based on actuarial predictions 4.400,000 Contributions in 2017 652.000 Benefits paid retirees in 2017 705,000 INSTRUCTIONS: Using the data above, compute pension expense for the year 2017 by preparing a pension worksheet (1) Prepare the journal entry for pension expense for 2017 Compute the amount of net gains or losses to be amortized for 2017 and 2018

Answer 1

F Part II Journal Entries 1 & 2 Admin Cost 1,363,000.00 1,363,000.00 To Defined Benefit Obligation (For recording Current and Past Service Cost) Opening Balance 1 Prior Service Cost 2 Current Service Cost 3 Return 4 Contributions 5 Benefits Paid 6 Remeasurements Closing balance Obligation | 4,300,000.00 840,000.00 523,000.00 430,000.00 (652,000.00) (705,000.00) (336,000.00) 4,400,000.00 Plan Assets Net Impact 4,316,000.00 16,000.00 (840,000.00) (523,000.00) 431,600.00 1,600.00 652,000.00 (705,000.00) 78,400.00 414,400.00 4,121,000.00 (279,000.00) 3 Defined Benefit Obligation 1,600.00 1,600.00 To Finance Income (Being Finance Income Recorded) 4 Defined Benefit Obligation 652,000.00 652,000.00 12 Parti 13 Pension Expense Admin Cost (Prior Service Cost+Current Service Cost) Finance Income on Net Plan Assets To Bank (Being Contributions Recorded) 1,363,000.00 (1,600.00) 5 Defined Benefit Obligation 705,000.00 Remeasurements - OCl not reclassified to PL 414,400.00 705,000.00 To Plan Assets (Being paid to retirees) 6 OCI - Remeasurements 414,400.00 414,400.00 To Defined Benefit Obligation (Being remeasurements recorded) 23 Part III This part seems Ambigious as there is amortisation asked for 2018 but in Question no reference for 2018 is provided Accumulated OCI Losses will never be reclassified to Profit and Loss.