Answered: Pension asset/liability (January 1)…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

(Pension Expense, Journal Entries) Latoya Company provides the following selected information related to its defined benefit pension plan for 2017.

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Instructions
(a) Compute pension expense and prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017. Preparation of a pension worksheet is not required. Benefits paid in 2017 were $35,000.
(b) Indicate the pension-related amounts that would be reported in the company’s income statement and balance sheet for 2017.

Pension asset/liability (January 1)
Accumulated benefit obligation (December 31)
Actual and expected return on plan assets
Contributions (funding) in 2017
Fair value of plan assets (December 31)
$ 25,000 Cr.
400,000
10,000
150,000
800,000
Settlement rate
10%
Projected benefit obligation (January 1)
700,000
80,000
Service cost

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