Question 1

Explain the following terms. Include the definition, how they are calculated, treated in the accounting records (general ledger) and shown in the financial statements.

Define Benefit Obligation

Plan Assets

Pension Asset/Liability

Pension Expense

Other Comprehensive Income (OCI) gain/loss

Ridley Corporation is a manufacturing company in the Caribbean. The company sponsors a defined benefit pension plan for its employees. The following balances relate to the plan on January 1, 2020. (amounts in thousands). Defined benefit obligation $340,000 Plan assets (market-related value) $270,000 Pension asset/liability $ 70,000 Cr OCILoss $ 39,000 On December 31, 2020, the actuary provided the following additional data as a result of the operation of the plan during the year. Actual return on plan assets $27,000 Service cost $45,000 Benefits paid retirees $41,000 Contributions $65,000 Discount (interest) rate 7% Instructions.

Prepare a 2020 pension worksheet with supplementary schedules.

Determine the amounts of the components of pension expense that should be recognised by the company in 2020.

Prepare the journal entry to record pension expense and the employers contribution to the pension plan in 2020.

Indicate the pension-related amounts that would be reported on the income statement and the statement of financial position for Ridley Corporation for the year 2020.