Imane Corporation, a publicly accountable entity, was formed on January 1, 20x2 and immediately initiated a defined
Question:
Imane Corporation, a publicly accountable entity, was formed on January 1, 20x2 and immediately initiated a defined benefit pension plan for all employees on the same day. The plan assets at January 1, 20x3, held by a trustee, amounted to $425,000. Data for the current year, 20x3, is as follows:
Current service cost for 20x3 | $230,000 |
Payments to pension plan (was debited to the pension liability account) | 150,000 |
Actual return on plan assets | 20,000 |
Balance in defined benefit plan, December 31, 20x3 per actuary | 690,000 |
Yield on high quality corporate bonds | 5% |
The unadjusted trial balance as at December 31, 20x3 shows a debit balance of $65,000 in the Pension Liability account.
The service component of pension expense should be debited to administrative expenses.
Required
Prepare one adjusting journal entry related to this pension plan at December 31, 20x3. Hint: start with reconciling the defined benefit obligation and the plan assets at the end of the year.
