Mount Co. has the following defined benefit pension plan balances on January 1, 2010. Defined benefit obligation
Question:
Mount Co. has the following defined benefit pension plan balances on January 1, 2010.
Defined benefit obligation ............$4,500,000
Fair value of plan assets ..................4,500,000
The discount rate applicable to the plan is 10%. On January 1, 2011, the company amends its pension agreement so that past 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 2010.
(b) Prepare any journal entries related to the pension plan that would be needed at December 31, 2010.
(c) Prepare a pension worksheet for 2011 and any journal entries related to the pension plan as of December 31, 2011.
(d) As of December 31, 2011, prepare a schedule reconciling the funded status with the reported pension liability.
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0470616314
IFRS edition volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield