Question
Howard Corp. sponsors a defined-benefit pension plan for its employees. On January 1, 2011, the following balances related to this plan. Plan assets (market-related value)
Howard Corp. sponsors a defined-benefit pension plan for its employees. On January 1, 2011, the following balances related to this plan.
Plan assets (market-related value) $450,000
Projected benefit obligation 600,000
Pension asset/liability 150,000 Cr. Prior service cost 75,000 OCI Loss 65,000 As a result of the operation of the plan during 2011, the actuary provided the following additional data at December 31, 2011. Service cost for 2011 $ 75,000 Settlement rate 7% Actual return on plan assets in 2011 45,000 Expected return on plan assets in 2011 36,000 Amortization of prior service cost 20,000 Contributions in 2011 115,000 Benefits paid retirees in 2011 70,000 Average remaining service life of active employees 10 years Required: 1. Using the corridor method, calculate the amount of loss to be amortized from OCILoss account in 2011. 2. Complete the pension worksheet provided on the next page for Howard Corp. for the year 2011. Clearly distinguish debit and credit entries. (You may create your own worksheet using Excel or Word.) 3. Prepare the journal entry for pension expense in 2011.
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