FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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FMC Inc. provides its employees with a defined benefit pension plan. Details are as follows: 

Present value defined benefit obligation (DBO) — December 31, 2020 $7,000,000
Plan assets — December 31, 2020 $5,900,000
Plan’s actuary confirmed that 4% is the appropriate interest rate to use.  
Current service costs (CSC) for the year  $590,000
Past service costs (PSC) (improvement in benefits) — January 1, 2020 $60,000
Expected ending DBO — December 31, 2020  $7,200,000
Expected ending plan assets — December 31, 2020 $6,500,000
Remitted to pension trustee — evenly throughout year  $670,000
Payments to retirees — evenly throughout year $640,000

What journal entry should FMC prepare to record the remeasurement gains/losses and actuarial gains/losses for the year? Assume FMC reports under IFRS.

Question 18 options:

 

a) 

DR OCI — actuarial losses 200,000  
DR OCI — losses on remeasurement of plan assets 600,000  
       CR Net defined benefit liability   800,000
 

b) 

DR OCI — actuarial losses 200,000  
DR Net defined benefit liability 400,000  
        CR OCI — gains on remeasurement of plan assets   600,000
 

c) 

DR Net defined benefit liability 800,000  
        CR OCI — actuarial gains   200,000
        CR OCI — gains on remeasurement of plan assets   600,000
 

d) 

DR OCI — losses on remeasurement of plan assets 600,000  
        CR OCI — actuarial gains   200,000
        CR Net defined benefit liability   400,000
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