Exercise 19-8 LINK TO TEXT Date Account Titles and Explanation Debit Credit 2017
ID: 2541317 • Letter: E
Question
Exercise 19-8
LINK TO TEXT
Date
Account Titles and Explanation
Debit
Credit
2017
2017
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Exercise 19-8
Ivanhoe Limited sponsors a defined benefit pension plan, and follows ASPE. The corporation’s actuary provides the following information about the plan (in thousands of dollars):January 1, 2017 December 31, 2017 Vested benefit obligation $1,500 $1,500 Defined benefit obligation, accounting basis 2,360 3,106 Plan assets (fair value) 1,340 2,086 Interest/discount rate 10% 10% Net defined benefit liability/asset ? ? Past service cost, plan amendment, effective December 30, 2017 350 Service cost for the year 2017 290 Contributions (funding) 2017 680 Benefits paid in 2017 130
Explanation / Answer
Explaination-
2086
Opening = 1340-2360 = $ 1020
Closing-Net Defined Liability =2086-3103 (plan Assets - Defined benefit obligation)= $1020
a)Interest A/C -Dr 102
To Defined Benefit obligation A/C - Cr 102
(Interest charged to defined Benefit Obligation)
b)Past Service Cost A/C-Dr 350
Current Service cost A/c - Dr 290
To Defined Benefit Obligation A/C - Cr 640
(Being Defined Benefit obligation Increased due to past and current service cost)
c)Defined Benefit obligation A/C - Dr 680
To Cash A/C - Cr 680
(being defined benefit obligation paid)
d) Defined Benefit Obligation A/C - Dr 62
To Other comprehensive Income A/C Cr 62
(Being decrease in liabilty in the nature of revaluation surplus)
The benefits on 130 paid would be -
Defined Benefit obligation A/C - Dr 130
To plAN Assets A/C - Cr 130
Defined Benefit Obligation Particulars $ Opening 2360 Interest@10% 236 Past Service cost 350 Service Cost 290 Less- Benefits Paid -130 Closing Balance 3106 Plan Assets $ Opening 1340 Interest @ 10% 134 Add- Contributions 680 Less- Benefits Paid -130 Total 2024 Add- Revaluation gain 62 Closing2086
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