Presented below is information related to the pension plan of Zimmer Inc. for the year 2017. 1
Question:
Presented below is information related to the pension plan of Zimmer Inc. for the year 2017.
1 | The service cost related to pension expense is $240,000 using the projected benefits approach. |
2 | The projected benefit obligation and the accumulated benefit obligation at the beginning of the year are $300,000 and $200,000, respectively. The expected return on plan assets is 9% and the settlement rate is 10%. |
3 | The accumulated OCI – prior service cost at the beginning of the year is $140,000. The company has a workforce of 200 employees, all who are expected to receive benefits under the plan. The total number of service-years is 1,000 and the service-years attributable to 2017 is 200. The company has decided to use the years-of-service method of amortization for these costs. |
4 | At the beginning of the period, fair value of pension plan assets, $280,000. The company had an Accumulated OCI (loss) at the beginning of the period of $90,000. Any amortization of unrecognized net loss is recognized on a straight-line basis over the average remaining service-life of the employees. |
5 | The contribution made to the pension fund in 2017 was $231,000. |
6 | Actual return on plan assets in 2017 is $27,000. $35,000 benefits are paid to retirees. |
Instructions
(a) Determine the pension expense to be reported on the income statement for 2017.
(b) Prepare the journal entries to record pension expense for 2017.