The York Corporation, a public company, operates a defined benefit pension plan for its employees. Data for
Question:
The York Corporation, a public company, operates a defined benefit pension plan for its employees. Data for the plan for the year 20x6 are as follows: Defined benefit obligation, December 31, 20x5 Plan assets, December 31, 20x5 $28,796,500 35,843,700 Current service cost-end of 20x6 Benefits paid to retirees- end of 20x6 Contributions to pension plan- end of 20x6 3,250,000 1,980,000 (1,250,000) 6% Actual return on plan assets - 20x6 Yield on high-quality corporate bonds.
At the end of the year, the company sold off one of its subsidiaries. The employees of this subsidiary were derecognized from the pension plan and a payment of $2,120,000 was made to the employees from the pension plan assets. The reduction in the DBO for these employees was $1,870,500. The actuary did a clean slate revaluation of the pension plan and estimates the ending DBO balance to be $29,500,000. No entries have been made with regards to the pension plan with the exception of the $600,000 contribution which was debited to the Pension Expense.
Required
Calculate the reconciliation of the DBO and Plan Assets from the beginning to the end of the year and prepare the journal entry(ies) relative to the information above.
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson