Branfield Corporation sponsors a defined benefit plan for its 100 employees. On January 1, 2011, the company’s actuary provided the following information:
Unrecognized past service cost ........$ 390,000
Pension plan assets (fair value) ........1,040,000
Accrued benefit obligation ........1,430,000
The participating employees’ expected average remaining service life (EARSL) and average remaining service period to full eligibility is 8.5 years. All employees are expected to receive benefits under the plan. On December 31, 2011, the actuary calculated that the present value of future benefits earned for employee services rendered in the current year amounted to $213,200; the accrued benefit obligation was $1,825,200; the fair value of pension assets was $1,376,600; and the accumulated benefit obligation amounted to $1,729,000. The expected return on plan assets and the discount rate on the accrued benefit obligation were both 10%. The actual return on plan assets is $80,600. The company funded the current service cost as well as $106,600 of the past service costs in the current year. No benefits were paid during the year.
The company accounts for its pension plan with the deferral and amortization approach under PE GAAP.
Instructions
Round all answers to the nearest dollar.
(a) Determine the pension expense that the company will recognize in 2011, identifying each component clearly. (Do not prepare a work sheet.)
(b) Calculate the amount of any 2011 increase/decrease in unrecognized actuarial gains or losses, and the amount to be amortized in 2011 and 2012 under the corridor approach.
(c) Prepare the journal entries to record pension expense and the company’s funding of the pension plan in 2011.
(d) Prepare a schedule that reconciles the plan’s funded status with the accrued pension asset/liability reported on the December 31, 2011 balance sheet.
(e) Assume that the liability and asset losses on the accrued benefit obligation and plan assets arose because of the disposal of a segment of Branfield’s business. How should these losses be reported on the company’s 2012 financial
statements?