Instruetions: (a) Determine the amounts of the components of pension expense that should be recognized by the company in 2019. (b) Prepare the journal entry or entries to record pension expense and the employer's contribution to the pension trustee in 2019. (c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year 2019

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 5P
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W13-3 Happy Company sponsors a defined benefit pension plan for its employees. The following data
relate to the operation of the plan for the year 2019 in which no benefits were paid.
1. The actuarial present value of future benefits earned by employees for services rendered in 2019
amounted to P56, 000.
2. The company's funding policy requires a contribution to the pension trustee amounting to P145, 000 for
2019.
3. As of January 1, 2019, the company had a projected benefit obligation of P900, 000, an accumulated
benefit obligation of P800, 000, and a balance of P400, 000 in accumulated OCI (PSC). The fair value of
pension plan assets amounted to P600, 000 at the beginning of the year. The actual and expected return on
plan assets was P54, 000. The settlement rate was 9%. No gains or losses occurred in 2019 and no benefits
were paid.
4. Amortization of prior service cost was $50,000 in 2012. Amortization of net gain or loss was not required
in 2012.
Instructions:
(a) Determine the amounts of the components of pension expense that should be recognized by the company
in 2019.
(b) Prepare the journal entry or entries to record pension expense and the employer's contribution to the
pension trustee in 2019.
(c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year
2019
Transcribed Image Text:W13-3 Happy Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2019 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2019 amounted to P56, 000. 2. The company's funding policy requires a contribution to the pension trustee amounting to P145, 000 for 2019. 3. As of January 1, 2019, the company had a projected benefit obligation of P900, 000, an accumulated benefit obligation of P800, 000, and a balance of P400, 000 in accumulated OCI (PSC). The fair value of pension plan assets amounted to P600, 000 at the beginning of the year. The actual and expected return on plan assets was P54, 000. The settlement rate was 9%. No gains or losses occurred in 2019 and no benefits were paid. 4. Amortization of prior service cost was $50,000 in 2012. Amortization of net gain or loss was not required in 2012. Instructions: (a) Determine the amounts of the components of pension expense that should be recognized by the company in 2019. (b) Prepare the journal entry or entries to record pension expense and the employer's contribution to the pension trustee in 2019. (c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year 2019
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