Griseta Limited sponsors a defined benefit pension plan for its employees, which it accounts for using the deferral and amortization approach under ASPE. The following data relate to the operation of the plan for the year 2013:

1. The actuarial present value of future benefits earned by employees for services rendered in 2013 amounted to $56,000.

2. The company’s funding policy requires a contribution to the pension trustee of $145,000 for 2013.

3. As of January 1, 2013, the company had an accrued benefit obligation of $1 million and an unrecognized past service cost of $400,000. The fair value of pension plan assets amounted to $600,000 at the beginning of the year. The actual and expected return on plan assets was $54,000. The discount rate was 9%.

4. Amortization of past service costs was $40,000 in 2013.

5. No benefits were paid in 2013.

Instructions

(a) Determine the pension expense that should be recognized by the company in 2013.

(b) Prepare the journal entries to record pension expense and the employer’s payment to the pension trustee in 2013.

(c) Determine the plan’s funded status and reconcile this to the Net Defined Benefit Liability/Asset account on the December 31, 2013 balance sheet.

(d) Assuming Griseta is not a public company and does not have broad public accountability, prepare the required disclosures for the 2013 financial statements.

(e) Calculate the January 1, 2013 balance in Net Defined Benefit Liability/Asset account.