Mars Inc. follows IFRS. It operates a defined benefit pension plan that provides its employees with a retirement income based on years of service and average of their final five years’ earnings prior to retirement.

On December 31, 2020, the fair value of the plan assets amounted to $1,103,000 and the defined benefit obligation was determined to be $1,283,000.

The following information is available with respect to the pension plan’s operations in 2021:

Current service cost $ 168,000

Pension benefits paid (on December 31, 2021) 50,000

Funding contribution (made on August 1, 2021) 201,000

Rate used for interest on obligations and expected return on plan assets 9.0%

Actual return on plan assets 130,000

Required:

1. Prepare the pension worksheet for 2021.
2. Prepare journal entries to record the pension expense and pension funding for 2021.
3. Ignore the above information. Assume that you are the owner of a company and that you have decided to implement a pension plan for your employees. Which type of plan would you prefer to implement? Why?

Answer rating: 100% (QA)

Given data Mars Inc follows IFRS It operates a defined benefit pension plan that provides its employ... View the full answer