Bruce-West Advertising, Inc., initiated a defined-benefit pension plan five years ago. All prior service costs are for vested employees. The beginning balances related to the company’s pension plan are presented below:
Description Current Year (000s omitted)
Beginning plan assets at fair value
(market- related value)…………………………… $ 8,010
Beginning projected benefit obligation…………... 9,133
Service costs……………………………………… 1,827
Settlement rate…………………………………… 8%
Expected return on plan assets…………………… 4%
Actual return on plan assets……………………… 570
Contributions for the year……………………….. 1,060
Benefits paid during the year……………………. 900
Amortization of prior service cost……………….. 670
Beginning balance of:
• Unamortized prior service cost………………… 2,020
• Unamortized net actuarial gains……………….. 3,012
Average remaining service life of employees…… 5 years
Required
a. Compute the pension cost for the year.
b. Determine the ending balances of the plan assets and the projected benefit obligation and indicate the funded status of the plan.
c. Reconcile the ending balance in accumulated other comprehensive income and indicate the amounts attributable to unamortized prior service cost and unamortized net losses.
d. Prepare the journal entry to record the current year’s pension cost.