Ultra-Home Corporation provides the following information related to its defined-benefit pension plan for 2014. Pension liability (January

Question:

Ultra-Home Corporation provides the following information related to its defined-benefit pension plan for 2014.

Pension liability (January 1) .............$ 500,000

Accumulated benefit obligation (December 31) ....1,250,000

Actual and expected return on plan assets ....... 15,000

Contributions (funding) in 2014 .......... 210,000

Fair value of plan assets (December 31) .......... 960,000

Settlement rate ................. 8%

Projected benefit obligation (January 1) .......1,500,000

Service cost .................. 165,000

Instructions

(a) Compute pension expense and prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014.

(b) Indicate the pension-related amounts that would be reported in the company’s income statement and balance sheet for 2014.

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