Calculations Shown. Question 1
The following information is available for the pension plan of Radcliffe Company for the year 2014.
Actual and expected return on plan assets
Benefits paid to retirees
Contributions (funding)
Interest/discount rate
Prior service cost amortization
Projected benefit obligation, January 1, 2014
Service cost
Compute pension expense for the year 2014.
Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Question 2
The following facts apply to the pension plan of Boudreau Inc. for the year 2014.
Plan assets, January 1, 2014 $490,000
Projected benefit obligation, January 1, 2014 $490,000
Settlement rate 8 %
Service cost $40,000
Contributions (funding) $25,000
Actual and expected return on plan assets $49,700
Benefits paid to retirees $33,400
Using the preceding data, compute pension expense for the year 2014. As part of your solution, prepare a pension worksheet that shows the journal entry for pension expense for 2014 and the year-end balances in the related pension accounts.
Question 3
Gingrich Importers provides the following pension plan information.
Fair value of pension plan assets, January 1, 2014 $2,400,000
Fair value of pension plan assets, December 31, 2014 $2,725,000
Contributions to the plan in 2014 $280,000
Benefits paid retirees in 2014 $350,000
From the data above, compute the actual return on the plan assets for 2014
Kenseth Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values for its pension plan assets.
Projected Plan
Benefit Assets
Obligation Value
2013 2,000,000 1,900,000
2014 2,400,000 2,500,000
2015 2,950,000 2,600,000
2016 3,600,000 3,000,000
The average remaining service life per employee in 2013 and 2014 is 10 years and in 2015 and 2016 is 12 years. The net gain or loss that occurred during each year is as follows: 2013, $280,000 loss; 2014, $90,000 loss; 2015, $11,000 loss; and 2016, $25,000 gain.
Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule.
Question 5
The actuary for the pension plan of Gustafson Inc. calculated the following net gains and losses.
Incurred during the Year (Gain) or Loss
2014 $300,000
2015 $480,000
2016 $(210,000)
2017 $(290,000)
Other information about the company’s pension obligation and plan assets is as follows.
As of January 1, Projected Benefit Plan Assets
Obligation (market-related asset value)
2014 $4,000,000 $2,400,000
2015 $4,520,000 $2,200,000
2016 $5,000,000 $2,600,000
2017 $4,240,000 $3,040,000
Gustafson Inc. has a stable labor force of 400 employees who are expected to receive benefits under the plan. The total service-years for all participating employees is 5,600. The beginning balance of accumulated OCI (G/L) is zero on January 1, 2014. The market-related value and the fair value of plan assets are the same for the 4-year period. Use the average remaining service life per employee as the basis for amortization.
Compute the minimum amount of accumulated OCI (G/L) amortized as a component of net periodic pension expense for each of the years 2014, 2015, 2016, and 2017. Apply the “corridor” approach in determining the amount to be amortized each year. (Round answers to 0 decimal places, e.g. 2,500.)
Question 6
Webb Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2014, the following balances relate to this plan.
Plan assets $480,000
Projected benefit obligation $600,000
Pension asset/liability $120,000
Accumulated OCI (PSC) $100,000 Dr.
As a result of the operation of the plan during 2014, the following additional data are provided by the actuary.
Service cost $90,000
Settlement rate, 9%
Actual return on plan assets $55,000
Amortization of prior service cost 19,000
Expected return on plan assets 52,000
Unexpected loss from change in projected benefit obligation, 76,000
due to change in actuarial predictions
Contributions 99,000
Benefits paid retirees 85,000
Using the data above, compute pension expense for Webb Corp. for the year 2014 by preparing a pension worksheet
Prepare the journal entry for pension expense for 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
