Question

Howard Corp. sponsors a defined-benefit pension plan for its employees. On january 1, 2011, the following balances are related to its defined benefit pension plan: Plan assets (market-related value) Projected benefit obligation Pension asset liability Prior service cost UEGL - Loss 520,000 660,000 140,000 60,000 95,000 On December 31, 2011, the actuary provides the following additional data: Service cost for 2011 Actual return on plan assets in 2011 Amortization of prior service cost Contributions in 2011 Benefits paid retirees in 2011 Settlement rate Expected return rate Average remaining service life of active employees (years) 72,000 42,000 8,000 60,000 40,000 8% 9% 6 On its 2011 Balance Sheet, reported Prepaid/Accrued pension cost under liabilities should be $162,800 $158,970 $156,760 $173,600

Answer 1

Year 2011 1 Pension Expense $ 90,833.33 2 Journal entry 2011 Account title & Explaination Debit Credit Annual pension expense 90,833 OCI-Prior Service Cost $ 8,000 OCI-Gain/Loss) $ 33 Cash $ 60,000 Net Pension Asset/liability $ 22,800 (To record pension expense and remeasurement loss recorded) 60,000 3 Plan Asset Cash (To record the contribution made) 60,000 40,000 Net Pension Asset/liability Cash (To record benefit paid) 40,000 4 Net Pension Asset/(liability) $ (1,62,800) 5 Projected benefit obligation Plan Asset Plan Surplus/(Deficit) $ $ $ (7,44,800) 5,82,000 (1,62,800)

Pension Worksheet 2011-IFRS Items Annual Pension Expense Cash Plan Asset 5,20,000 - Balance, Jan 1, 2011 Past Service Cost created Service Cost Interest Cost Actual return Unexpected gain/ loss Amortisation of PSC Amortisation of OCI-Gain/loss Liability (increases)/decreases Contributions Benefits Actual return - Expected return Gain/(loss) 42,000 $ 42,000.00 $ 46,800.00 $ (4,800.00) 8% 9% - S S $ $ $ $ $ S S $ $ $ $ S S - OCI-Prior OCI- Pension Projected benefit Service Cost Gain/(Loss) Asset/liability obligation $ 60,000S (95,000) S (1,40,000) $ (6,60,000) S S $ $ S $ $ $ (72,000) $ $ $ $ (52,800) $ $ $ $ $ S (4,800) $ $ S $ $ (8,000) S $ S $ 4,833 $ $ $ $ $ $ $ $ $ $ $ 40,000 $ $ $ $ $ $ (8,000) $ 33 $ (22,800) $ (84,800) $ S 60,000 s (95,000) $ $ S $ 52,000 $ (94,967) $ (1,62,800) $ (7,44,800) $ $ $ 72,000 $ 52,800 $ (42,000) $ (4,800) $ 8,000 $ 4,833 $ $ $ $ 90,833 $ $ $ - (60,000) 10% of higher of PBO or Plan asset 60,000 OCI-Gain/(Loss) (40,000) Amount to be amortised Avg remaining service life 62,000 Amt to be included in service cost $ (66,000.00) $ 95,000.00 $ 29,000.00 6 year (60,000) $ 4,833 Journal entry for 2011 Accumulated OCI dec 31, 2010 Balance, December 31, 2011 - 5,82,000

On its 2011 balancesheet ,reported Prepaid/Accured Pension cost under liabilities should be - $ 1,62,800

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