On January 1, 20x5, publicly accountable entity Pug Corp. reported the following balances relating to its defined
Question:
On January 1, 20x5, publicly accountable entity Pug Corp. reported the following balances relating to its defined benefit pension plan: | ||
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| Defined benefit obligation | $12,000,000 |
| Fair value of plan assets | 11,400,000 |
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Other data related to the pension plan for 20x5 are: | ||
| Current service cost | 2,800,000 |
| Contribution to the pension plan | 1,675,000 |
| Benefits paid to retirees | 1,777,000 |
| Actual return on plan assets | 2,450,000 |
| Yield on high quality corporate bonds | 7% |
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On June 30, 20x5, Pug sold its controlling interest in one of its subsidiaries, and as such the employees were removed from the pension plan. Consequently, the defined benefit obligation and plan assets decreased by $900,000 and $510,000, respectively. | ||
Required – | ||
a) | Calculate the defined benefit obligation at December 31, 20x5. | |
b) | Calculate the fair value of plan assets at December 31, 20x5. | |
c) | Prepare the journal entry for the year. | |
Expert Answer:
Answer Answer to a Calculation of Projected Benefit Obligation on December 31 20x5 Particulars Amount Opening Defined Benefit Liability 1200000000 Add Current Service Cost 280000000 Add Interest 12000... View the full answer
