1.Harrison Forklift’s pension expense includes a service cost of $10 million. Harrison began the year with...
1.Harrison Forklift’s pension expense includes a service cost of $10 million. Harrison began the year with a pension liability of $28 million (underfunded pension plan).
Required:
Prepare the appropriate general journal entries to record Harrison’s pension expense in each of the following independent
situations regarding the other components of pension expense ($ in millions):
1. Interest cost, $6; expected return on assets, $4; amortization of net loss, $2.
2. Interest cost, $6; expected return on assets, $4; amortization of net gain, $2.
3. Interest cost, $6; expected return on assets, $4; amortization of net loss, $2; amortization of prior service cost,$3 million.
Homework Answers
General Journal (Amount in Million)
| No | Account Title and Explanation | Debit | Credit |
| 1 | Pension Expenses | $14 | |
| Plan Assets | $4 | ||
| PBO ($10 Service Cost+$6 Interest Cost) | $16 | ||
| Net Loss - AOCI | $2 | ||
| 2. | Pension Expenses | $10 | |
| Plan Assets | $4 | ||
| Net Gain -AOCI | $2 | ||
| PBO ($10+$6) | $16 | ||
| 3 | Pension Expense | $17 | |
| Plan Assets | $4 | ||
| PBO ($10+$6) | $16 | ||
| Net Loss -AOCI | $2 | ||
| Prior Service Cost | $3 |
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