Answered: A partially completed pension…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 3RE: Pinecone Company has plan assets of 500,000 at the beginning of the current year and expects to earn...

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Question

A partially completed pension spreadsheet showing the relationships among the elements that comprise the defined benefit pension plan of Universal Products is given below. The actuary's discount rate is 5%. At the end of 2019, the pension formula was amended, creating a prior service cost of $120,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year as well as the previous two years.

Prior
Net Pension
Plan
Service
Net Loss
Pension
(Liability)
($ in thousands)
PBO
Assets
Cost – AOCI
- AOCI
Expense
Cash
I Asset
Balance, Jan. 1, 2021
$ (680.0)
$
420.0 $
114.0
$
68.0
$ (260.0)
Service cost
88.0
Interest cost, 5%
(34.0)
Expected return on assets
(33.6)
Adjust for:
Loss on assets
8.0
Amortization:
Prior service cost
Amortization:
Net loss
Gain on PBO
12.0
Prior service cost
Cash funding
(72.0)
Retiree benefits
Balance, Dec. 31, 2021
$ (740.0) $
420.0
108.0
$
76.0
$
54.4
$
(248.0)

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