Henning Company sponsors a defined benefit pension plan for its employees. The following data relate to the

Question:

Henning Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2015.

1. The actuarial present value of future benefits earned by employees for services rendered in 2015 amounted to £56,000.

2. The company’s funding policy requires a contribution to the pension trustee amounting to £145,000 for 2015.
3. As of January 1, 2015, the company had a defined benefit obligation of £900,000, an accumulated benefit obligation of £800,000, and a balance of £40,000 in accumulated OCI (Loss). The fair value of pension plan assets amounted to £600,000 at the beginning of the year. The discount rate was 9%.
Actual return on plan assets was £60,000, and no benefits were paid.
Instructions

(a) Determine the amounts of the components of pension expense that should be recognized by the company in 2015.

(b) Prepare the journal entry or entries to record pension expense and the employer’s contribution to the pension trustee in 2015.

(c) Indicate the amounts that would be reported on the income statement and the statement of financial position for the year 2015.

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Intermediate Accounting IFRS Edition

ISBN: 9781118443965

2nd Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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