Pension data for the Ben Franklin Company include the following for the current calendar year: Discount rate, 8% Expected return on plan assets, 10% Actual return on plan assets, 9% Service cost, $260,000 January 1: PBO $ 1,460,000 ABO 1,060,000 Pl
Pension data for the Ben Franklin Company include the following for the current calendar year:
Discount rate, 8%
Expected return on plan assets, 10%
Actual return on plan assets, 9%
Service cost, $260,000
| January 1: | |
|---|---|
| PBO | $ 1,460,000 |
| ABO | 1,060,000 |
| Plan assets | 1,560,000 |
| Amortization of prior service cost | 26,000 |
| Amortization of net gain | 4,600 |
| December 31: | |
| Cash contributions to pension fund | $ 226,000 |
| Benefit payments to retirees | 246,000 |
Required:
Determine pension expense for the year.
Prepare the journal entries to record pension expense and funding for the year.
Homework Answers
1)
Service cost | 260,000 |
Interest cost | 116,800= 1,460,000*8% |
Expected return | -156,000= 10%* 1,560,000 |
Amortization of prior service cost | 26,000 |
Amortization of net gain | -4,600 |
Pension expense | 242,200 |
2) Record the pension expense for the year.
dr. pension expense 242,200 |
Dr. net gains pensions (amortization of net gain-OCI) 4600 |
Dr. Pension assets (plan assets) 156,0000 |
Cr.Pbo 376,800 |
Cr. Prior service cost (amortization of prior service cost-OCI) 26,000 |
PBO ($260,000 + $116,800) = $376,800
Record funding for the year.
Dr. Pension assets (plan assets) | 226,000 |
Cr. Cash | 226,000 |
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Pension data for the Ben Franklin Company include the following for the current calendar year: Discount rate, 8% Expected return on plan assets, 10% Actual return on plan assets, 9% Service cost, $260,000 January 1: PBO $ 1,460,000 ABO 1,060,000 Pl
Pension data for Matta Corporation include the following for the current calendar year: ($ in millions) Discount rate, 10% PBO, January 1 $ 371 PBO, December 31 461 ABO, January 1 211 ABO, December 31 286 Cash contributions to pension fund, December
Pension data for Matta Corporation include the following for the current calendar year: ($ in millions)Discount rate, 10%PBO, January 1$ 371PBO, December 31461ABO, January 1211ABO, December 31286Cash contributions to pension fund, December 31111Benefit payments to retirees, December 3165Required:Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the current year.Note: Enter your answers in millions rounded to 1 decimal place.
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