Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2019, Smith Company adopted a defined benefit pension plan. At that time, Smith awarded retroactive benefits to its employees, resulting in a

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

On January 1, 2019, Smith Company adopted a defined benefit pension plan. At that time, Smith awarded retroactive benefits to its employees, resulting in a prior service cost that created a projected benefit obligation of $1,250,000 on that date (which it did not fund). Smith decided to amortize the prior service cost by the straight-line method over the 20-year average remaining service life of its active participating employees. Smith's actuary has also provided the following additional information for 2019 and 2020: (1) service cost: 2019, $145,000; 2020, $152,000; (2) expected (and actual) return on plan assets: 2020, $34,000; and (3) projected benefit obligation: 1/1/2020, $1,520,000. The discount rate was 10% in both 2019 and 2020. Smith contributed $330,000 and $350,000 to the pension fund at the end of 2019 and 2020, respectively. There are no other components of Smith's pension expense. Required: 1. Compute the amount of Smith's pension expense for 2019 and 2020. 2. Prepare all the journal entries related to Smith's pension plan for 2019 and 2020. 3. Next Level If the prior service cost was vested, explain how Smith's pension expense for 2019 would be different under amended IAS 19. 1. Compute the amount of Smith's pension expense for 2019 and 2020. 2019 2020 Pension expense $334,500.00 X $334,500.00 X P PAGE 2019 PAGE 2020 GENERAL JOURNAL Score: 0/155 DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 PAGE 2019 PAGE 2020 GENERAL JOURNAL Score: 0/155 DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2. 3 4 5 3. If the prior service cost was vested, what amount would Smith recognize as pension expense for 2019 under amended IAS 19? Points: 071

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Governance And Statutory Audit Stakes And Articulations

Authors: Chefick Olagbèyindé Olafa

1st Edition

6204385682, 978-6204385686

More Books

Students also viewed these Accounting questions