Calculations for the Entire Employee Pool

Example #$2$: Comprehensive Example for Employee Pool

Interest $($Cost$)$ Rate

Expected rate of return on plan assets

Actual rate of return on plan assets

COMPONENTS OF THE PBO:

Projected benefit obligation at the beginning of $2017$

Service cost, $2017$

Loss $($gain$)$ on PBO for the current year

CY G$/$L on PBO from changes in assumptions

Less: Benefits paid to retirees during the year

COMPONENTS OF THE PLAN ASSETS:

Plan assets at the beginning of the year

Cash contributions to the pension plan in $2017$

Less: Benefits paid to retirees during the year $($same as above$)$

OTHER INFORMATION NEEDED:

Beginning balance in cash account

Average remaining service years of employees

ADDITIONAL INFORMATION REPORTED FROM THE ACTUARY AND PLAN TRUSTEE:

Beginning of year $2017$ balance in AOCI for PSC

Gain or Loss already in beginning AOCI Information:

Beginning $2017$ year balance AOCI for Net Loss $($prev$.$ losses $>$ prev. gains$)$

PY diff b$/$t actual$/$expected AND PY G$/$L on PBO from assumptions

ALL COMPUTATIONS ARE FOR $2017$:

$1.$ Calculate the interest cost and record the journal entry.

$2.$ Calculate the expected return on plan assets and record the journal entry.

$3.$ Calculate the actual return on plan assets:

$4.$ Calculate the adjustments for gain or loss mad record the journal entry.

$5.$ Calculate the amortization of PSC$.$

$6.$ Calculate the amortization of the net gain or loss $($if required$)$ and record the journal entry:

$7.$ A loss of assumption changes has what impact on regular net income? Increase, decrease, or no impact.

$8.$ Record the journal entry for payments to retirees:

$9.$ Record the journal entry for contributions to the plan:

$10.$ What amount should be debited to pension expense?

$11.$ Rather than recording each entry separately we could use the pension worksheet to record the amounts as follows: