Pina Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows. Employee Future Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $79,200. Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules.

Pina Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows. Employee Future Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $79,200. Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules.

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter10: Liabilities: Current, Installment Notes, And Contingencies

Section: Chapter Questions

Problem 10.5BE

See similar textbooks

Exercise 20-05

Pina Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows.

Employee		Future Years of Service
Jim		3
Paul		4
Nancy		5
Dave		6
Kathy		6

On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $79,200.

Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Compute the cost per service year:

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Exercise 20-11 Sarasota Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $55,500. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $151,990 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation of $893,900, an accumulated benefit obligation of $794,800, and a debit balance of $403,900 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $603,500 at the beginning of the year. The actual and expected return on plan assets was $54,400. The settlement rate was 10%. No gains or losses occurred in 2020 and no benefits were paid. 4. Amortization of prior service cost was $49,800 in 2020. Amortization of net gain or loss was not required…
Exercise 20-11 Sarasota Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $55,500. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $151,990 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation of $893,900, an accumulated benefit obligation of $794,800, and a debit balance of $403,900 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $603,500 at the beginning of the year. The actual and expected return on plan assets was $54,400. The settlement rate was 10%. No gains or losses occurred in 2020 and no benefits were paid. 4. Amortization of prior service cost was $49,800 in 2020. Amortization of net gain or loss was not required in 2020.…
Exercise 20-10 Shamrock Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $498,300 Projected benefit obligation 614,700 Pension asset/liability 116,400 Accumulated OCI (PSC) 96,900 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $92,500 Settlement rate, 9% Actual return on plan assets 54,200 Amortization of prior service cost 18,100 Expected return on plan assets 51,200 Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions 74,200 Contributions 97,200 Benefits paid retirees 82,600 Using the data above, compute pension expense for Shamrock Corp. for the year 2020 by preparing a pension worksheet. (Enter all amounts as…
Problem 20-07 Tamarisk Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances related to this plan. Plan assets (market-related value) $474,000 Projected benefit obligation 759,000 Pension asset/liability 285,000 Cr. Prior service cost 84,000 Net gain or loss (debit) 89,000 As a result of the operation of the plan during 2020, the actuary provided the following additional data for 2020. Service cost $107,000 Settlement rate, 9%; expected return rate, 10% Actual return on plan assets 43,000 Amortization of prior service cost 25,000 Contributions 138,000 Benefits paid retirees 93,000 Average remaining service life of active employees 10 years Using the preceding data, compute pension expense for Tamarisk Corp. for the year 2020 by preparing a pension worksheet that shows the journal entry for pension expense. (Enter all amounts as positive.) TAMARISK…
Problem 20-02 Jackson Company adopts acceptable accounting for its defined benefit pension plan on January 1, 2019, with the following beginning balances: plan assets $200,000; projected benefit obligation $250,000. Other data relating to 3 years’ operation of the plan are as follows. 2019 2020 2021 Annual service cost $16,000 $19,000 $26,000 Settlement rate and expected rate of return 10 % 10 % 10 % Actual return on plan assets 18,000 22,000 24,000 Annual funding (contributions) 16,000 40,000 48,000 Benefits paid 14,000 16,400 21,000 Prior service cost (plan amended, 1/1/20) 160,000 Amortization of prior service cost 54,400 41,600 Change in actuarial assumptions establishes a December 31, 2021, projected benefit obligation of: 520,000 Indicate the pension-related amounts reported in the financial…
Exercise 20-07 The following defined pension data of Teal Corp. apply to the year 2020. Projected benefit obligation, 1/1/20 (before amendment) $568,000 Plan assets, 1/1/20 553,400 Pension liability 14,600 On January 1, 2020, Teal Corp., through plan amendment, grants prior service benefits having a present value of 130,000 Settlement rate 10 % Service cost 58,500 Contributions (funding) 64,300 Actual (expected) return on plan assets 47,100 Benefits paid to retirees 36,300 Prior service cost amortization for 2020 17,400 For 2020, prepare a pension worksheet for Teal Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
Pension Question (30 marks)Sophia Consultants Inc. has had a defined benefit pension plan since January 1, 2018.The following represents beginning balances as at January 1, 2022:Plan Asset $1,155,300; Defined Benefit Obligation $1,275,000; Net Pension Liability $119,700Additional Information is as follows for 2022:Current Service cost is $186,000 for 2022Company Funding/Contribution is $200,000 for 2022. Funding is made on December 31 of each year.Actual return on assets is $55,900 for 2022.There is an increase in obligation for $29,000 due to changes in Actuarial assumptions at Dec 31, 2022.There are payments made equal to $80,000 per year to retired employees in 2022 (payments to retireesare made at the end of the year on December 31).Past service cost of $85,900 from plan amendment dated December 31, 2022: liability is increasedbecause benefits were increased on a retroactive basis.For 2022, the assumed interest rate is 6%. Assume IFRS.Required:1. Determine Defined Benefit…
Exercise 20-03 (Part Level Submission) Windsor Company provides the following information about its defined benefit pension plan for the year 2020. Service cost $91,400 Contribution to the plan 102,900 Prior service cost amortization 9,600 Actual and expected return on plan assets 64,900 Benefits paid 40,600 Plan assets at January 1, 2020 632,300 Projected benefit obligation at January 1, 2020 686,100 Accumulated OCI (PSC) at January 1, 2020 147,300 Interest/discount (settlement) rate 11 % A. Prepare a pension worksheet inserting January 1, 2020, balances, showing December 31, 2020.
Question 17 Swifty Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $55,500. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $144,729 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation of $908,100, an accumulated benefit obligation of $802,100, and a debit balance of $400,100 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $601,200 at the beginning of the year. The actual and expected return on plan assets was $54,100. The settlement rate was 9%. No gains or losses occurred in 2020 and no benefits were paid. 4. Amortization of prior service cost was $50,500 in 2020. Amortization of net gain or loss was not required in 2020. (c)…
Question 16## Buffalo Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $463,200 Projected benefit obligation 578,200 Pension asset/liability 115,000 Accumulated OCI (PSC) 100,100 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $86,600 Settlement rate, 8% Actual return on plan assets 53,200 Amortization of prior service cost 18,000 Expected return on plan assets 50,200 Unexpected loss from change in projected benefit obligation,   due to change in actuarial predictions 79,600 Contributions 99,600 Benefits paid retirees 85,100 Also please help me answer part B. (b) Prepare the journal entry for pension expense for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is…
Question 16 Buffalo Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $463,200 Projected benefit obligation 578,200 Pension asset/liability 115,000 Accumulated OCI (PSC) 100,100 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $86,600 Settlement rate, 8% Actual return on plan assets 53,200 Amortization of prior service cost 18,000 Expected return on plan assets 50,200 Unexpected loss from change in projected benefit obligation,   due to change in actuarial predictions 79,600 Contributions 99,600 Benefits paid retirees 85,100 Prepare the journal entry for pension expense for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and…
Question 16# Buffalo Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $463,200 Projected benefit obligation 578,200 Pension asset/liability 115,000 Accumulated OCI (PSC) 100,100 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $86,600 Settlement rate, 8% Actual return on plan assets 53,200 Amortization of prior service cost 18,000 Expected return on plan assets 50,200 Unexpected loss from change in projected benefit obligation,   due to change in actuarial predictions 79,600 Contributions 99,600 Benefits paid retirees 85,100 (b) Prepare the journal entry for pension expense for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the…