Question

Pronghorn 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		$1,515,000		$1,541,000
Market-related and fair value of plan assets		816,000		1,152,600
Accumulated benefit obligation		1,631,000		1,751,000
Accumulated OCI (G/L)—Net gain		0		(201,500	)

The service cost component of pension expense for employee services rendered in the current year amounted to $76,000 and the amortization of prior service cost was $120,000. 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 $1,200,000 on January 1, 2017. Assume no benefits paid in 2017.

Determine the amounts of the components of pension expense that should be recognized by the company in 2017. (Enter amounts that reduce pension expense with either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)

Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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

Answer 1

Anwar O Determine the amounts of the components de pension Expenses interest on projected benefit obligation = fr ojee-to benefit obligation * Rate -- $1,515,000 X 10) =151,500 Expected them on plan cassets = {mcen kat related & fair valuc de pkan assets v kate ) = 816,0067104 81,600 Amount $16.000 particulars sowite cost interest.com projected benefit obligation. --- Expected return on plan assets. Amortisation of prior period cost Total pension_Expense 151,500 (481,600.) $120,000 $265,900 1. ri Tokelde pension expense = {'265,900

@ pension asset = cash #other comprchen sive income (psc) + Other Comprehensive income (ALL) - pension Expense = $255,000 + 120,000 + 2001, 500 - 965,900 $310,600 poepeere goumal Entry Debeta) credite $365,900 $310,600 I dati I General Tournal 2017 pension superca fcasion asset. cash other comprehensive in.com. (p<c) Icthez.comprchensive. Încome (GL) prepare par-tial ro.come statement :- $255,000 $120,000 $ 201,500 Amount (6) particulars Tolal revenue Liss expense pension expense spension Expense is €265,900 $265,900

prepare comprehensive ºn comc. statement; Amount Amount 265,900 particulars Pension Expica.se comprehensive income statem.cat ---- nick_in.come_ wamaan other comprehensive income.ldoos.com Amortisation de pseum liability gain Laman memu $180,000 2001500 agromnom trenummern $321,500 -$55,600 .compuchessive.m.comellors Los compliehen.s'ne income bloss is $ 55,600 Prepare balance sheet for 2017 : Assets cach - $ 255,000 $ 310,600 $55600 Pension Asset Total assets liabidilics. ou loss (pse) ou loss (GL) Retained Earnings Total liabilities 16.120,000 $201.500 1-965,900 $55,600