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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
Baron Company adopted a defined benefit pensionplan on January 1, 2018. The following information pertains to the pension plan for 2019 and 2020:
There are no other components of Baron’s pension expense.
Required:
- 1. Compute the amount of Baron's pension expense for 2019 and 2020.
- 2. Prepare the journal entries to record the pension expense for 2019 and 2020.
1.
Calculate the amount of pension expense of Company B for 2019 and 2020.
Pension plan: Pension plan is the plan devised by corporations to pay the employees an income after their retirement, in the form of pension.
Calculate the amount of pension expense of Company B for 2019:
| Particulars | 2019 | 2020 |
| Amounts in ($) | Amounts in ($) | |
| Service cost | $160,000 | $172,000 |
| Add: Interest cost | $9,600 (1) | $23,168(2) |
| Less: Expected return on plan assets | $9,600 (1) | $23,568 (2) |
| Pension expense for 2019 | $160,000 | $171,600 |
Table (1)
Working note (1):
Calculate the interest cost for 2019:
Calculate the interest cost for 2020:
2.
Prepare the necessary journal entries of Company B to record the pension expense for 2019 and 2020.
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