M Service Co. reported the following for its defined-benefit pension plan for 2020:             Service cost                                                                                                                             $600,000             Actual return on plan

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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  1. ) M Service Co. reported the following for its defined-benefit pension plan for 2020:

            Service cost                                                                                                                             $600,000

            Actual return on plan assets                                                                                                    460,000

            Benefits paid to retirees                                                                                                           418,000

            Cash contributions made by M to the pension plan                                                           100,000

            Settlement rate                                                                                                                                   4%

            Expected rate of return on plan assets                                                                                           7%

            Average remaining service life of existing employees                                                     10 years

            Projected benefit obligation as of 12-31-19                                                                     4,800,000

            Fair value of plan assets as of 12-31-19                                                                            5,000,000

            Other comprehensive income – Gains/Loss as of 12-31-19                                        495,000 cr

 

Changes in actuarial assumptions resulted in a required 12-31-20 PBO of $4,700,000

 

  • Using the above information for M, prepare a pension work sheet for 2020
  • Using the work sheet, prepare the journal entry to reflect the accounting for the company's pension plan for the year ending December 31, 2020.

Will M need to record corridor amortization for 2021, yes or no?

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