Puhlman Inc. provides a defined benefit pension plan to its employees. It smooths recognition of its gains
Question:
Puhlman Inc. provides a defined benefit pension plan to its employees. It smooths recognition of its gains and losses when computing its market-related value to compute expected return. Additional information follows:
During 20X1, the PBO increased by $33,000 due to a decrease in the discount rate from the previous year. The 20X0 discount rate assumption was used to compute 20X1 service cost and interest cost.
Required:
Round all amounts to the nearest dollar:
1. Compute the fair value of plan assets at December 31, 20X1.
2. Compute the prior service cost that would be amortized as a component of pension expense for 20X1 and 20X2.
3. Compute the PBO at December 31, 20X1.
4. Compute pension expense for 20X1.
5. Prepare the company’s required pension journal entries for 20X1.
6. Compute the 20X1 increase/decrease in AOCI—net actuarial (gains) or losses and the amount to be amortized in 20X1 and 20X2.
7. Confirm that the pension asset (liability) on the balance sheet equals the funded status as of December 31, 20X1.
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer