On January 1, 2019, Smith Company adopted a defined benefit pension plan. At that time, Smith awarded retroactive benefits to its employees, resulting in a prior service cost that created a projected benefit obligation of $1,250,000 on that date (which it did not fund). Smith decided to amortize the prior service cost by the straight-line method over the 20-year average remaining service life of its active participating employees. Smith’s actuary has also provided the following additional information for 2019 and 2020: (1) service cost: 2019, $147,000; 2020, $153,000; (2) expected (and actual) return on plan assets: 2020, $33,000; and (3) projected benefit obligation: 1/1/2020, $1,522,000. The discount rate was 10% in both 2019 and 2020. Smith contributed $330,000 and $350,000 to the pension fund at the end of 2019 and 2020, respectively. There are no other components of Smith’s pension expense. Required: 1. Compute the amount of Smith’s pension expense for 2019 and 2020. 2. Prepare all the journal entries related to Smith’s pension plan for 2019 and 2020. 3. Next Level If the prior service cost was vested, explain how Smith’s pension expense for 2019 would be different under amended IAS 19.

Hubbard, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2021. 1/1/21 $13,300,000 7,000,000 2,800,000 -0- The service cost component of pension expense for 2021 is $1,040,000 and the amortization of prior service cost due to an increase in benefits is $210,000. The settlement rate is 10% and the expected rate of return is 8%. What is the amount of pension expense for 2021? a. $2,062,000 b. $2,020,000 c. $1,936,000 d. $1,740,000 12/31/21 $13,720,000 Projected benefit obligation Pension assets (at fair value) Accumulated benefit obligation Net (gains) and losses 8,050,000 3,220,000 280,000

Methods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2019, Wolz amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. Wolz's actuary has determined that the related prior service cost amounts to $105,000 . Wolz has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service:   EmployeeNumbers Expected Years ofFuture Service 1 2 2 3 3 4 4 5   Required: 1 a. Using the straight-line method, compute the average remaining service life. If required, round your answer to one decimal place.fill in the blank 598f5cf91fd1034_1 years   1 b. Using the straight-line method, prepare a schedule to amortize the prior service cost. Enter all amounts as positive…

Pearl Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1.   The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $56,100. 2.   The company’s funding policy requires a contribution to the pension trustee amounting to $136,572 for 2020. 3.   As of January 1, 2020, the company had a projected benefit obligation of $903,400, an accumulated benefit obligation of $799,600, and a debit balance of $401,800 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $602,500 at the beginning of the year. The actual and expected return on plan assets was $54,400. The settlement rate was 8%. No gains or losses occurred in 2020 and no benefits were paid. 4.   Amortization of prior service cost was $49,700 in 2020. Amortization of net gain or loss was not required in 2020.