Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The
Question:
Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The remaining amortization period at December 31, 20X0, for prior service cost is 5 years. The average remaining service life of employees is 11 years at January 1, 20X1, and 10 years at December 31, 20X1. The AOCI—net actuarial (gain) loss was zero at December 31, 20X0. Turner smooths recognition of its gains and losses when computing its market-related value to compute expected return.
Additional Information:
Required:
Round all amounts to the nearest dollar:
1. Compute the amount of prior service cost that would be amortized as a component of pension expense for 20X1 and 20X2.
2. Compute the actual return on plan assets for 20X1.
3. Compute the unexpected net gain or loss on plan assets for 20X1.
4. Compute pension expense for 20X1.
5. Prepare the company’s required pension journal entries for 20X1.
6. Compute the 20X1 increase/decrease in AOCI—net actuarial (gain) loss and the amount to be amortized in 20X1 and 20X2.
7. Confirm that the pension asset (liability) on the balance sheet equals the funded status as of December 31, 20X1.
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer