Vaughn Corporation is a privately owned company that follows ASPE. On December 31, 2019, Vaughns financial records
Question:
Vaughn Corporation is a privately owned company that follows ASPE. On December 31, 2019, Vaughn’s financial records indicated the following information related to the company’s defined benefit pension plan:
Defined Benefit Obligation | $ 7,542,300 | |
Pension Plan Assets | 7,245,200 |
On January 1, 2020, Vaughn acquired the operations of SZL Ltd. As one of the conditions of the purchase, Vaughn agreed that SZL’s employees would be included in Vaughn’s defined benefit pension plan and would be granted credit for the past service of SZL’s employees. The actuary estimated the value of the prior service amount granted on January 1, 2020 to be $ 311,500.
Vaughn’s actuary provided the following information on December 31, 2020:
Current year service cost | $ 381,200 | |
Employer contributions for the year | 427,500 | |
Benefits paid to retirees | 181,000 | |
Actuarial increase in pension obligations | 127,400 | |
Expected return on assets | 6% | |
Actual return on assets | 5% | |
Discount rate | 6% |
1) Prepare a pension worksheet for Vaughn Corporation for the year ending December 31, 2020.
2) Prepare the journal entry to record the pension expense for 2020
3) What is the funded status on December 31, 2020?
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon