Ferreri Company received the following selected information from its pension pla
ID: 2423426 • Letter: F
Question
Ferreri Company received the following selected information from its pension plan trustee concerning the operation of the company's defined benefit pension plan for the year ended December 31, 2014 December 31, 2014 Projected benefit obligation Market-related and fair value of plan assets Accumulated benefit obligation Accumulated OCI (G/L)-Net gain January 1, 2014 $1,439,500 865,000 1,400,700 $1,468,100 1,293,400 1,511,540 (193,950) The service cost component of pension expense for employee services rendered in the current year amounted to $78,600 and the amortization of prior service cost was $110,840. The company's actual funding (contributions) of the plan in 2014 amounted to $341,900. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,108,400 on January 1, 2014. Assume no benefits paid in 2014 Determine the amounts of the components of pension expense that should be recognized by the company in 2014. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) components of ension Expense -Explanation / Answer
Components of pension expenses $ Current service cost 78600 Interest cost 7860 Past service cost 110840 Expected return from paln asset; Fair value of plan asste as on 01/01/2014 865000 Add: Contribution for the year 341900 Less: Benefit paid 0 Adjusted Balance (A) 1206900 Fair value of plan asste as on 31/12/2014 (B) 1293400 Actual return from plan asset (B)- (A) 86500 Expected return from paln asset; (1206900 x 10%) 120690 Actuarial loss (86500-120690) 34190 Effect of curtailement (1511540-1400700) 110840 Total pension expenses 463020 $ Account tittle and Explanation Debit Credit Debit Current service cost 78600 Debit Interest cost 7860 Debit Expected return from paln asset 120690 Debit Actuarial loss 34190 Debit Past service cost 110840 Debit Effect of curtailement 110840 Credit Define Benefit Liability 4,63,020 Income statement $ Actual return from plan asset 86500 Less Pension expenses 463020 -376520 Balance sheet Liabilities Accumulated Benefit obligations 1511540 Add: Contribution for the year 341900 18,53,440 Assets Define benefit investments asset 1293400
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