Van Persie Corp. sponsors a defined-benefit pension plan for its employees. The
ID: 2451960 • Letter: V
Question
Van Persie Corp. sponsors a defined-benefit pension plan for its employees. The following balances related to the plan exist on December 31, 2009.
Plan assets (market value) $450,000
Projected benefit obligation 600,000
Pension asset/liability 150,000 Cr.
Van Persie amends the pension plan, effective 1/1/2010, and the actuary informs Van Persie that the Prior Service Cost associated with the amendment equals $90,000.
As a result of the operation of the plan during 2010, the actuary provided the following additional data on December 31, 2010.
Service cost for 2010 $ 75,000
Actual return on plan assets in 2010 45,000
Amortization of prior service cost 20,000
Contributions in 2010 115,000
Benefits paid retirees in 2010 70,000
Settlement rate 7%
Expected return rate 8%
Instructions
(a) Compute pension expense for Van Persie Corp. for the year 2010 by preparing the attached pension worksheet.
(b) Prepare the journal entry for pension expense.
General Journal Entries
Memo Record
Other Comprehensive Income
Items
Pension Expense
Cash
Prior Service Cost
Gains/Losses
Pension Asset/Liability
PBO
Plan Assets
150,000cr
1. Service cost
2. Interest
3.actual return
4. Amortized
Contributions
Benefits
General Journal Entries
Memo Record
Other Comprehensive Income
Items
Pension Expense
Cash
Prior Service Cost
Gains/Losses
Pension Asset/Liability
PBO
Plan Assets
150,000cr
1. Service cost
2. Interest
3.actual return
4. Amortized
Contributions
Benefits
Explanation / Answer
Van Persie Corp. sponsors a defined-benefit pension plan for its employees. The
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