Computing Pension Expense, Gain/Loss Amortization, PBO, and Plan Asset BalancesThe following data relate to a defined benefit pension plan for Hollistir Co. Fair value of plan assets, Jan. 1, 2020$9,600PBO Jan. 1, 2020, not including any items below12,000PSC from amendment dated Jan. 1, 2020, (10 years is the amortization period)6,000Gain from change in actuarial assumptions, computed as of Jan. 1, 20201,800Actual return on plan assets, 20201,200Contributions to plan assets in 20202,400Benefits paid to retirees in 20203,000Service cost for 20205,400Discount rate8%Expected rate of return on plan assets10% Required a. Compute pension expense for 2020. Hollistir amortizes the full pension gain/loss over average service life of 15 years, using the straight-line method.Pension expense, 2020 b. Compute PBO at December 31, 2020.PBO, Dec. 31, 2020 c. Compute fair value of plan assets at December 31, 2020. Fair value of plan assets, Dec. 31, 2020

Defined benefit plan defines a retirement plan provided by the employer to employee. The benefits…

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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 4E

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Computing Pension Expense, Gain/Loss Amortization, PBO, and Plan Asset Balances

The following data relate to a defined benefit pension plan for Hollistir Co.

Fair value of plan assets, Jan. 1, 2020	$9,600
PBO Jan. 1, 2020, not including any items below	12,000
PSC from amendment dated Jan. 1, 2020, (10 years is the amortization period)	6,000
Gain from change in actuarial assumptions, computed as of Jan. 1, 2020	1,800
Actual return on plan assets, 2020	1,200
Contributions to plan assets in 2020	2,400
Benefits paid to retirees in 2020	3,000
Service cost for 2020	5,400
Discount rate	8%
Expected rate of return on plan assets	10%

Required

a. Compute pension expense for 2020. Hollistir amortizes the full pension gain/loss over average service life of 15 years, using the straight-line method.

Pension expense, 2020

b. Compute PBO at December 31, 2020.

PBO, Dec. 31, 2020

c. Compute fair value of plan assets at December 31, 2020.

Fair value of plan assets, Dec. 31, 2020

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