Question

Intermediate Accounting 303

Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2010 and 2011. 2010 2011 Plan assets (fair value), December 31 $699,000 $849,000 Projected benefit obligation, January 1 700,000 800,000 Pension asset/liability, January 1 140,000Cr ? Prior service cost, January 1 250,000 240,000 Service cost 60,000 90,000 Actual and expected return on plan assets 24,000 30,000 Amortization of prior service cost 10,000 12,000 Contributions (funding) 115,000 120,000 Accumulated benefit obligation, December 31 500,000 550,000 Interest/settlement rate 9% 9% a) Compute pension expense for 2010 and 2011. B) Prepare the journal entries to record the pension expense and the company's funding of the pension plan for both years.

Answer 1

Answer:

a
Pension expense:
	2010	2011
Service cost	60000	90000
Interest cost @9%	63000	72000
Expected return on plan assets	-24000	-30000
Amortization of prior service cost	10000	12000
Pension expense	109000	144000
b
For 2010
Pension Asset/Liability	39000
Pension Expense	109000
Other Comprehensive income(PSC)		10000
Other Comprehensive income(G/L)		23000
Cash		115000
For 2011
Pension Expense	144000
Other Comprehensive income(PSC)		12000
Pension Asset/Liability		12000
Cash		120000