Question
Best Home Construction Corporation has a defined benefit pension plan. The 2019 data for this plan appear below. At 12/31/19: ($ in thousands) PBO ($3,765,000)
Best Home Construction Corporation has a defined benefit pension plan. The 2019 data for this plan appear below.
At 12/31/19: ($ in thousands)
PBO ($3,765,000)
ABO ($2,447,000)
Plan Assets $3,600,000
Pension Asset/(Liability) ($ 165,000)
For 2020:($ in thousands)
Amendment at 1/1/2020 - Prior Service cost $450,000
Actual return on plan assets $150,000
Service cost $207,000
Cash contributions $191,250
Retiree benefits paid $182,000
Settlement rate for liability 6%
Expected return on plan assets 4%
The average remaining service life of the active employee group is 15 years in 2020.
Required:
- Complete the pension worksheet
- Prepare the journal entry to record the plan amendment at 1/1/2020.
- Prepare the journal entry to record 2020 pension expense.
Please work and explain the required problems a, b, and c above including journal entry for 2020 pension expense. Thanks
Here's an example of a similar problem:
Pension Description Expense Balances at 12/31/2019 GENERAL JOURNAL Other Comprehensive Income Memo entry - Pension trust Unrecog Pension PSC (Gain)/Loss Asset/(Liab) PBO Plan Assets (165,000) (3,765,000) 3,600,000 | Cash Journal entry Journal entry Balances at 12/31/2020 Memo Record Pension Worksheet General Journal Entries Other Comprehensive Inc Prior Service Cost Gain/Loss Date Description Pension Expense Cash Pension Asset/ Liability (800) PBO (2,500) Plan Assets 1,700 1/1/2020 Service Cost (400) (250) Interest Expense on PBO 250 (170) Expected ROPA Actual ROPA - Expected ROPA (250) Funding Contributions (700) Benefits paid 200 (350) Unexpected PBO increase Journal Entry 12/31/2020 Balances 480 (700) 120 (680) (3,300) 2620 CHECK BALANCES (3,300) 2,620 difference Actual ROPA - Expected ROPA $170 +$250-420 Pension Required Cash 700 OCI - Vnres gain/loss Pension Description Expense Balances at 12/31/2019 GENERAL JOURNAL Other Comprehensive Income Memo entry - Pension trust Unrecog Pension PSC (Gain)/Loss Asset/(Liab) PBO Plan Assets (165,000) (3,765,000) 3,600,000 | Cash Journal entry Journal entry Balances at 12/31/2020 Memo Record Pension Worksheet General Journal Entries Other Comprehensive Inc Prior Service Cost Gain/Loss Date Description Pension Expense Cash Pension Asset/ Liability (800) PBO (2,500) Plan Assets 1,700 1/1/2020 Service Cost (400) (250) Interest Expense on PBO 250 (170) Expected ROPA Actual ROPA - Expected ROPA (250) Funding Contributions (700) Benefits paid 200 (350) Unexpected PBO increase Journal Entry 12/31/2020 Balances 480 (700) 120 (680) (3,300) 2620 CHECK BALANCES (3,300) 2,620 difference Actual ROPA - Expected ROPA $170 +$250-420 Pension Required Cash 700 OCI - Vnres gain/lossStep by Step Solution
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