Question

Paul Dobson Company sponsors a defined benefit plan for its 100 employees. On January 1, 2010, the company’s actuary provided the following information.
Unrecognized past service cost...............................................................£150,000
Pension plan assets (fair value) ...............................................................200,000
Defined benefit obligation.......................................................................350,000
The average remaining service period for the participating employees is 10.5 years. The average period to vesting of past service costs in 7.5 years. All employees are expected to receive benefits under the plan. On December 31, 2010, the actuary calculated that the present value of future benefits earned for employee services rendered in the current year amounted to £52,000; the defined benefit obligation was £452,000; and fair value of pension assets was £276,000. The expected return on plan assets and the discount rate on the defined benefit obligation were both 10%. The actual return on plan assets is £11,000. The company’s current year’s contribution to the pension plan amounted to £65,000. No benefits were paid during the year.

Instructions
(a) Determine the components of pension expense that the company would recognize in 2010. (With only one year involved, you need not prepare a worksheet.)
(b) Prepare the journal entry to record the pension expense and the company’s funding of the pension plan in 2010.
(c) Compute the amount of the 2010 increase/decrease in unrecognized gains or losses and the amount to be amortized in 2010 and 2011, using corridor amortization.
(d) Prepare a schedule reconciling the funded status of the plan with the pension amounts reported in the financial statements as of December 31,2010.


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  • CreatedJune 17, 2013
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