Marina Comp. 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, 2013:
January 1, 2013 December 31, 2013
Projected benefit obligation $2,500,000 $2,850,000
Fair value of plan assets 1,250,000 1,600,000
Accumulated benefit obligation 1,930,000 2,620,000
Accumulated OCI – (PSC) 540,000 300,000
The service cost component for 2013 is $120,000 and the amortization of prior service cost is $240,000. The company's actual funding of the plan in 2013 amounted to $490,000. The expected return on plan assets and the settlement rate were both 8%.
Answer | ||
Determination the pension expense to be reported in 2013. |
||
Service Cost | $ 120,000 | Given |
Interest on PBO | $ 200,000 | (2,500,000 x .08) |
Expected Returns | -$ 100,000 | (1,250,000 x .08) |
Amortization.of Prior Service Cost | $ 240,000 | Given |
Pension Expense 2013 | $ 460,000 |
Journal Entry: | ||
Explanation | Debit | Credit |
PENSION EXPENSE | $ 460,000 | |
Pension ASSETS /LIABILITY | $ 270,000 | |
CASH | $ 490,000 | |
OTHER COMPREHENSIVE INCOME (PSC) | $ 240,000 | |
( To record Pension Expenses) |
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