PENCOMPs balance sheet at December 31, 2025, is as follows. Additional information concerning PENCOMPs defined benefit pension

Question:

PENCOMP’s balance sheet at December 31, 2025, is as follows.image


Additional information concerning PENCOMP’s defined benefit pension plan is as follows.image


Other information about PENCOMP is as follows.


image


Accounting


Prepare an income statement for 2026 and a balance sheet as of December 31, 2026. Also, prepare the pension expense journal entry for the year ended December 31, 2026. Round to the nearest tenth (e.g., round 2.87 to 2.9).



Analysis


Compute return on equity for PENCOMP for 2026 (assume stockholders’ equity is equal to year-end average stockholders’ equity). Do you think an argument can be made for including some or even all of the change in accumulated other comprehensive income (due to pensions) in the numerator of return on equity? Illustrate that calculation.



Principles


Explain a rationale for why the FASB has (so far) decided to exclude from the current period income statement the effects of pension plan amendments and gains and losses due to changes in actuarial assumptions.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 9781119790976

18th Edition

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

Question Posted: