Question
Goodday Ltd., a public company, has a defined benefit pension plan and a 31 December year-end. The following information relates to the plan: Balances: Defined
Goodday Ltd., a public company, has a defined benefit pension plan and a 31 December year-end. The following information relates to the plan: Balances: Defined benefit obligation, end of 20X7 $ 5,290,000 Pension plan assets, fair value, end of 20X7 4,660,000 SFP net defined benefit liability, end of 20X7 630,000 cr. SFP accumulated OCI, pension, end of 20X7 72,200 dr. Retained earnings, end of 20X7 8,646,400 cr. 20X8 earnings, prior to any pension expense 4,230,000 cr. Current service cost for 20X8, measured using the projected unit credit method 625,300 New past service cost granted in 20X8, negative because benefits were reduced and the liability has declined (287,000 ) Contributions made to the pension plan assets paid at end of 20X8 434,000 Actuarial gain in 20X8, negative because caused by higher anticipated future mortality rates and the liability has declined (103,000 ) Actual earnings in the fund, reported by the pension fund trustee, including interest, dividends, and change in fair value 152,300 Benefits paid to pensioners from Pension fund assets paid at end of 20X8 69,400 Interest rate on long-term corporate bonds, end of 20X8 5 %
1. Calculate and record the first element of pension accounting, service cost, including: service cost and payment to the pension fund trustee.
2. Prepare the entry to record service cost and payment to the pension fund trustee.
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