Kindly show working out please The following data relate to a defined benefit pe

ID: 2459317 • Letter: K

Question

Kindly show working out please

The following data relate to a defined benefit pension plan:

DBO January 1, 2015, not including any of the following items……………………….….….. $20,000

Actuary’s discount rate………………………………………………………………….….….….. 8%

PSC from amendment dated January 1, 2015 …………………………………………..…..… 10,000

Gain from change in actuarial assumptions, computed as of January 1, 2015, ….………… 3,000

Actual return on plan assets, 2014…………………………………………………………….... 2,000

Fair value of plan assets January 1,2015……………………………………………………..... 16,000

Fair value of plan assets December, 31, 2015……………………………………………..….. 15,500

Contributions to plan assets in 2015…………………………………………………………...... 4,000

Benefits paid to retirees in 2015………………………………………………………………….. 5,000

Service cost for 2015……………………………………………………………………………..... 9,000

Present value of Defined Benefit Obligation calculated by the actuary on Dec 31, 2015…... 27,600

Required:

a)Determine the components of pension expense that the company would recognize in 2015.

b)Compute the Actual return on plan asset for 2015

c)Prepare the journal entry to record the pension expense and the company’s funding of the pension plan in 2015.

d)Indicate the pension amount reported in the financial statement as of December 31, 2015.

e)Prepare the pension worksheet.

Hint: To get the opening DBO on Jan 1 2015 to the amount given you must include past service cost and liability gain for Jan 1, 2015

Answer:

a: Pension expense to be recognised in 2015 is :

Service cost 9000

reduction in FMV 500

payment to retirees 5000

Total $14500

b: return on planned assets:

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