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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Refer to the information for Spath Company to the left. As of December 31, 2020, what is the balance in the pension plan asset fund?

  1. a. $456,000
  2. b. $630,000
  3. c. $654,000
  4. d. $840,000

To determine

Compute the balance in the pension plan asset fund as of December 31, 2020.

Explanation

Plan assets: The assets which are used to satisfy the postretirement obligation are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

Compute the balance in the pension plan asset fund as of December 31, 2020 as follows:

ParticularsAmount ($)
Amount funded in 2019$240,000
Add: Expected return on plan assets of 2019 (1)$24,000
Amount funded in 2020$390,000
Total654,000

Table (1)

Working note (1):

Calculate the expected return on plant assets for 2019:

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