Question

Exhibits 12.20 and 12.21 present selected information from the notes to the financial statements of Treadaway, Inc., a tire manufacturing company, regarding its U.S. pension and health care retirement plans.
a. Refer to Exhibit 12.20. Why does the interest cost of the U.S. pension plans exceed the expected return on assets for 2011 and 2012, but these amounts are identical for 2013?


b. What is the likely reason for the decline in the net expense for Treadaway’s health care plans between 2011 and 2012?
c. Why does Treadaway show no subtraction for the expected return on investments in computing net health care expense for each year?
d. What are the likely reasons that Treadaway reports an actuarial gain in its pension obligation and health care obligation for 2013?
e. Prepare an analysis that explains the change in Treadaway’s prior service cost for U.S. pension plans from $314 at the end of 2012 to $366 at the end of 2013.
f. Prepare an analysis that explains the change in Treadaway’s net actuarial loss for U.S. pension plans from $1,646 at the end of 2012 to $1,252 at the end of 2013.
g. Prepare an analysis that explains the change in Treadaway’s prior service cost for health care plans from $339 at the end of 2012 to $299 at the end of 2013.
h. Prepare an analysis that explains the change in Treadaway’s actuarial loss for health care plans from $340 at the end of 2012 to $221 at the end of 2013.
i. Give the journal entry that Treadaway would make at the end of 2013 to recognize net pension expense, pension funding, and the change in balance sheet accounts for its pension plan.
j. Give the journal entry that Treadaway would make at the end of 2013 to recognize net health care expense, health care funding, and the change in balance sheet accounts for its health careplan.


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  • CreatedMarch 04, 2014
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