Veldre Company provides the following information about its defined benefit pens
ID: 2485874 • Letter: V
Question
Veldre Company provides the following information about its defined benefit pension plan for the year 2014
Service cost $ 90,000
Contribution to the plan 105,000
Prior service cost amortization 10,000
Actual and expected return on plan assets 64,000
Benefits paid 40,000
Plan assets at January 1, 2014 640,000
Projected benefit obligation at January 1, 2014 700,000
Accumulated OCI (PSC) at January 1, 2014 150,000
Interest/discount (settlement) rate 10%
Using the precdeing data, compute pension expense for the year 2014. As a part of your solution, prepare a pension worksheet inserting January 1, 2014, balances, and journal entry recording pension expesne.
Explanation / Answer
Computation of pension expense:
Journal Entry :
Pension Expenses 106,000
Pension Liability 96,000
OCI Prior Service Cost 10,000
Pension Liability:
Increases PBO = 90,000+70,000
Increases Assets= -64,000
Pension Liability = 96,000
Service Cost $90,000 Interest Cost ($700,000 x 10%) $70,000 Expected return on plan assets ($ 64,000) Prior Service Cost Amortization $10,000 Pension Expense for 2014 $106,000Related Questions
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