Nunez Corp. sponsors a defined benefit pension plan for its employees. Information about the plan is...
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Nunez Corp. sponsors a defined benefit pension plan for its employees. Information about the plan is provided below. Required: (a) Determine the pension-related journal entries that Nunez should record for 2021 and 2022. (b) Determine the effects of the pension plan on Nunez's reported net income for 2021 and 2022 (ignoring taxes). (c) Determine the balances that Nunez should report on its December 31, 2021 and 2022 balance sheets for Net Pension Asset or Liability and Accumulated OCI-Prior Service Costs. Also indicate the sections of the balance sheet in which each of these items should appear (i.e., Assets, Liabilities, or Equity). (d) Prepare pension worksheets to summarize the pension data for 2021 and 2022. This should help you determine the answers to parts (a), (b), and (c) above. You may use the templates provided later in this document. Balances at December 31, 2020 ($ in thousands) Projected Benefit Obligation Plan Assets Accumulated OCI-Prior Service Costs Activity during the year ($ in thousands) Service cost Prior service cost (plan amended, Jan. 1, 2022) Actual return on plan assets Contributions from Nunez to pension plan Benefits paid from pension plan to retirees Other information Expected return on plan assets Discount rate ("settlement rate") Average expected future service life of active employees Other information (continued) 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total Employees remaining (of those active at 1/1/22) 100 85 75 65 55 $1,600 1,250 0 45 35 25 15 500 2021 $190 0 85 200 160 2021 8% 5% 5 years Nunez uses the expected return on assets. Nunez uses the years-of-service method for any necessary amortization of prior service costs. The January 1, 2022 plan amendment noted above affected all 100 employees that were active at that time. Those 100 employees are expected to provide service in the future as projected below. (I.e., Nunez expects those employees to provide 500 total future service-years and expects the company to "consume" those 500 service-years in the pattern below.) 2022 $205 310 120 270 165 2022 8% 5% 5 years 561 words Nunez Corp. sponsors a defined benefit pension plan for its employees. Information about the plan is provided below. Required: (a) Determine the pension-related journal entries that Nunez should record for 2021 and 2022. (b) Determine the effects of the pension plan on Nunez's reported net income for 2021 and 2022 (ignoring taxes). (c) Determine the balances that Nunez should report on its December 31, 2021 and 2022 balance sheets for Net Pension Asset or Liability and Accumulated OCI-Prior Service Costs. Also indicate the sections of the balance sheet in which each of these items should appear (i.e., Assets, Liabilities, or Equity). (d) Prepare pension worksheets to summarize the pension data for 2021 and 2022. This should help you determine the answers to parts (a), (b), and (c) above. You may use the templates provided later in this document. Balances at December 31, 2020 ($ in thousands) Projected Benefit Obligation Plan Assets Accumulated OCI-Prior Service Costs Activity during the year ($ in thousands) Service cost Prior service cost (plan amended, Jan. 1, 2022) Actual return on plan assets Contributions from Nunez to pension plan Benefits paid from pension plan to retirees Other information Expected return on plan assets Discount rate ("settlement rate") Average expected future service life of active employees Other information (continued) 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total Employees remaining (of those active at 1/1/22) 100 85 75 65 55 $1,600 1,250 0 45 35 25 15 500 2021 $190 0 85 200 160 2021 8% 5% 5 years Nunez uses the expected return on assets. Nunez uses the years-of-service method for any necessary amortization of prior service costs. The January 1, 2022 plan amendment noted above affected all 100 employees that were active at that time. Those 100 employees are expected to provide service in the future as projected below. (I.e., Nunez expects those employees to provide 500 total future service-years and expects the company to "consume" those 500 service-years in the pattern below.) 2022 $205 310 120 270 165 2022 8% 5% 5 years 561 words
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a Pensionrelated journal entries for 2021 1 Service Cost Dr Pension Expense Income Statement 190000 Cr Accrued Pension Cost Balance Sheet 190000 2 Act... View the full answer
Related Book For
Intermediate Accounting Volume 2
ISBN: 9781119497042
12th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
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