BuyFindarrow_forward

Intermediate Accounting: Reporting...

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

Solutions

Chapter
Section
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
1 views

Various pension plan information of Kerem Company for 2019 and 2020 is as follows:

Chapter 19, Problem 8P, Various pension plan information of Kerem Company for 2019 and 2020 is as follows: Required: Next

Required:

Next Level Fill in the blanks lettered (a) through (k). All the necessary information is listed. It is not necessary to calculate your answers in alphabetical order.

To determine

Calculate the missing amount from (a) through (k) and fill the given blanks.

Explanation

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 missing amount from (a) through (k) and fill the given blanks as follows:

Particulars20192020
Service cost$ 100,000$79,000 (i)
Interest cost on projected benefit obligation$ 54,000$64,800 (g)
Discount rate9%9%
Amortization of prior service cost$ 4,000$ 4,000
Plan assets (fair value), 1/1$ 500,000$ 615,000
Projected benefit obligation, 1/1$600,000 (a)$ 720,000
Expected long-term rate of return on plant assets10% (b)11%
Amortization of net loss$800 (d)$ 700
Accrued pension cost (liability), 12/31$105,000 (f)$95,800 (k)
Average service life of employees10 years10 years
Pension expense$108,800 (e)$ 110,850
Cumulative net loss, 1/1$ 68,000$109,000 (j)
Expected return on plan assets$ 50,000$67,650 (h)
Corridor$60,000 (c)$ 72,000

Table (1)

Note: Refer working notes for necessary calculations.

Working note (1):

Calculate the missing amount of (d) amortization net loss for 2019, (e) pension expense for 2019, (f) accrued pension cost for 2019, (i) beginning cumulative net loss for 2020, (j) service cost for 2020, and (k) accrued pension cost for 2020.

Worksheet of Company K for 2019 and 2020
Item 2019 2020
 Amount ($) Amount ($)
Service cost 100,000(j)109,000
Add: Interest cost on projected benefit obligation 54,00064,800
Less: Expected return on plan asset (50,000)(67,650)
Add: Amortization of prior service cost 4,0004,000
Add: Amortization of net loss 800700
Pension expense(e)108,800110,850
Beginning cumulative net loss 68,000(i)79,000
Less: Corridor (60,000)(72,000)
Excess net loss (A) 8,0007,000
Average service life (in years) (B) 1010
Amortization of net loss [AB](d)800700
Ending projected benefit obligation 720,000857,800
Less: Fair value of plan asset (615,000)(762,000)
Accrued pension cost (liability)(f)105,000(k)95,800

Table (2)

Working note (2):

Calculate (a) the projected benefit obligation for 2019

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Give an example of a preventive control.

Accounting Information Systems

What is the purpose of depreciation?

College Accounting, Chapters 1-27

Use a production possibilities frontier to describe the idea of efficiency.

Principles of Microeconomics (MindTap Course List)

CAPM AND REQUIRED RETURN Bradford Manufacturing Company has a beta of 1.45, while Farley Industries has a beta ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

MIRR Refer to Problem 11-1. What is the projects MIRR?

Fundamentals of Financial Management (MindTap Course List)