Kessler, Inc. received the following information from its pension plan trustee c
ID: 2381027 • Letter: K
Question
Kessler, 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, 2013:January 1, 2013 December 31, 2013
Projected benefit obligation $2,500,000 $2,850,000
Fair value of plan assets 1,250,000 1,600,000
Accumulated benefit obligation 1,930,000 2,620,000
Accumulated OCI – (PSC) 540,000 300,000
The service cost component for 2013 is $120,000 and the amortization of prior service cost is $240,000. The company's actual funding of the plan in 2013 amounted to $490,000. The expected return on plan assets and the settlement rate were both 8%.
(a) Determine the pension expense to be reported in 2013.
Explanation / Answer
(a) Determine the pension expense to be reported in 2013. Serv Cost 120,000 $120,000 Int on PBO (2,500,000 x .08) $200,000 Expected Returns (1,250,000 x .08) ($100,000) Amort.of Prior Serv Cost $240,000 Pension Expense $460,000 Journal Entry: Penion Expense $460,000 Pension Asset / Liability 270000 CASH $490,000 Other Comprehensive Income (PSC) $240,000
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