ezto. 10.00 points Harrison Forklift\'s pension expense includes a service cost

Question

ezto. 10.00 points Harrison Forklift's pension expense includes a service cost of $16 million. Harrison began the year with a pension liability of $40 million (underfunded pension plan). 1. Interest cost, $12; expected retun on assets, $10, amortization of net loss, $3. 2. Interest cost, $12, expected retum on assets, $9; amortization of net gain, $3. 3. Interest cost, $12, expected retun on assets, $9, amortization of net loss, $3, amortization of prior service cost, $4 million Required: Prepare the appropriate general joumal entries to record Harrison's pension expense in each of the following independent situations regarding the other components of pension expense (S in milions): (If no entry is required for a transactionlevent, select "No journal entry required" in the first account field. Enter your answers in millions(i.o 10,000,000 should be entered as 10o)) View transaction list Prepare the appropriate journal entry to record pension expense in situation 1 above. uation 1 Prepare the appropriate journal entry to record pension expense in situation 2 above. expense in situation 3 above. Note:-journal entry has been entered 30 3 Q W

Explanation / Answer

Solution: Transaction General Journal Debit Credit 1. Pension expense 21 Plan assets 10 PBO 28 Loss—AOCI 3 Working Notes: Pension expense 21 [28 + 3 - 10 = 21 ] [Balancing figure] Plan assets 10 (expected return on assets) PBO 28 ($16 service cost + $12 interest cost) Loss—AOCI 3 (current amortization) Transaction General Journal Debit Credit 2. Pension expense 16 Plan assets 9 Gain—AOCI 3 PBO 28 Working Notes: Pension expense 16 [28 - 3 - 9 = 16 ] [Balancing figure] Plan assets 9 (expected return on assets) Gain—AOCI 3 (current amortization) PBO 28 ($16 service cost + $12 interest cost) Transaction General Journal Debit Credit 3. Pension expense 26 Plan assets 9 PBO 28 loss—AOCI 3 Prior service cost 4 Working Notes: Pension expense 26 [28 + 3 + 4 - 9 =   ] [Balancing figure] Plan assets 9 (expected return on assets) PBO 28 ($16 service cost + $12 interest cost) loss—AOCI 3 (current amortization) Prior service cost-OCI 4 (current amortization) Please feel free to ask if anything about above solution in comment section of the question.

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