Welsa Manufacturing. Inc. offers a noncontributory, defined-benefit pension plan to its employees. The average remaining service life
Question:
Welsa Manufacturing. Inc. offers a noncontributory, defined-benefit pension plan to its employees. The average remaining service life of employees is 10 years. The company provides you with the following information for the year ended December 31, 2019:
Employer's contribution at end of year ............................................................ $1,600,000
Service cost ........................................................................................................... 600,000
Projected benefit obligation - beginning of the year ....................................... 6,043,200
Plan assets (at fair value market-related value) beginning of the year ......... 4,000,000
Expected return on plan assets .......................................................................... 9%
Settlement rate ..................................................................................................... 8%
Actual return on plan assets .............................................................................. $360,000
Cost of plan amendment retroactive to January 1 .......................................... 400,000
There were no benefits were paid during the year.
Required:
a. Compute the total pension expense recognized in 2019. Assume the prior service cost is amortized over the average remaining service life of the employees.
b. Prepare the journal entry to record pension expense for the year ended December 31, 2019.
c. Indicate the amounts that are reported on the income statement and the balance sheet for 2019.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0134730370
2nd edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella