Zac Brown company sponsors a defined benefit pension plan for employees. The following data relates to the
Question:
Zac Brown company sponsors a defined benefit pension plan for employees. The following data relates to the operation of the plan for the year 2017.
2017
Accumulated benefit obligation January 1 575000
Vested benefit obligation, January 1 480,000
Projected Benefit obligation, January 1 650,000
Plan assets January 1 410,000
AOCI- Unrecognized prior service cost , January 1 160,000
AOCI- Unrecognized gain, January 1 75,000
Relevant information for 2017 includes the following information
Service Cost 40,000
Interest Rate (Settlement Rate) 10.00%
Expected Rate of Return 8.00%
Actual return on plan assets 36,000
Contribution made by company to trust in 2017 50,000
Benefits paid retirees in 2017 31,500
Average remaining service period 10 years
Unrecognized prior service cost amortized on straight-line basis based on average remaining service life. The company uses the corridor method for amortization of unrecognized gains or losses.
A1. Start a pension worksheet for 2017. Be sure to calculate the January 1 2017. Balance in the pension asset/Liability Account. Determine Pension expense for 2017 and indicate ending balance in all pension accounts on the company`s books and trustee accounts.
B. Prepare the journal entry for pension expense for 2017.
C. If net income is 950,000 (including the pension expense) what is comprehensive income?
Intermediate Accounting
ISBN: 978-1119048541
11th Canadian edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy