Problem 20-4 Sweet Company sponsors a defined benefit pension plan. The followin
ID: 2402923 • Letter: P
Question
Problem 20-4 Sweet Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2017 and 2018. 2017 2018 Plan assets (fair value), December 31 Projected benefit obligation, January 1 Pension asset/liability, January 1 Prior service cost, January 1 Service cost Actual and expected return on plan $831,810 $1,010,310 833,000 166,600 Cr 297,500 71,400 28,560 11,900 136,850 595,000 952,000 assets Amortization of prior service cost Contributions (funding) Accumulated benefit obligation, 285,600 107,100 35,700 14,280 142,800 654,500 December 31 Interest/settlement rate 9% 996Explanation / Answer
Question: Compute pension expense for 2017 & 2018.
Answer: The Pension expense formula= Service Cost (Current)+ Interest cost (Beginning PBO*Interest rate) – Return on plan assets + Amortization of prior service costs – Gains + Loss + Amortization of existing net obligations/assets
Formula
2017
2018
Service Cost (Current)
71,400
107,100
Interest cost (Beginning PBO*Interest rate)
.09*833,000
.09*952,000
(Return on plan assets)
-28,560
-35,700
Amortization of prior service costs
11,900
14,280
(Gains )
0
0
Losses
0
0
Amortization of existing net obligations/assets
0
0
Net Pension Expense=
Formula
2017
2018
Service Cost (Current)
71,400
107,100
Interest cost (Beginning PBO*Interest rate)
74970
85680
(Return on plan assets)
-28,560
-35,700
Amortization of prior service costs
11,900
14,280
(Gains )
0
0
Losses
0
0
Amortization of existing net obligations/assets
0
0
Net Pension Expense=
129,710
171,360
Formula
2017
2018
Service Cost (Current)
71,400
107,100
Interest cost (Beginning PBO*Interest rate)
.09*833,000
.09*952,000
(Return on plan assets)
-28,560
-35,700
Amortization of prior service costs
11,900
14,280
(Gains )
0
0
Losses
0
0
Amortization of existing net obligations/assets
0
0
Net Pension Expense=
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