Hobbs Co. has the following defined benefit pension plan balances on January 1, 2012. Projected benefit obligation

Question:

Hobbs Co. has the following defined benefit pension plan balances on January 1, 2012.

Projected benefit obligation                 $4,600,000
Fair value of plan assets                        4,600,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2013, the company amends its pension agreement so that prior service costs of $600,000 are created. Other data related to the pension plan are:
            

Instructions
  (a) Prepare a pension worksheet for the pension plan in 2012.
  (b) Prepare any journal entries related to the pension plan that would be needed at December 31, 2012.
  (c) Prepare a pension worksheet for 2013 and any journal entries related to the pension plan as of December 31, 2013.
  (d) Indicate the pension-related amounts reported in the 2013 financial statements.

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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0470587287

14th Edition

Authors: kieso, weygandt and warfield.

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