QUESTION

ABC Corp., a publicly accountable entity initiated a defined benefit pension plan in 2008. At December 31, 2021 the plan had a underfunded status of $800,000 based on a defined benefit obligation (DBO) of $4,200,000.

The company provided $600,000 of funding to the plan on January 2, 2022 and $1,200,000 on June 30, 2022. At the end of 2022 payments to beneficiaries of the plan were made totalling $1,800,000.

Effective January 1, 2022 the company's new contract became effective resulting in a pension enhancement amounting to $800,000 based on services plan members had provided in prior periods.

In 2022, the actuaries have estimated the current service cost to be $750,000 and the DBO at December 31, 2022 was estimated to be $4,400,000. Also at December 31, 2022 the plan trustee has reported that the fair value of the plan assets was $3,400,000.

For 2022, the yield on high quality corporate bonds was 3.2%.

REQUIRED

NOTE: USE OF A WORKSHEET MAY BE HELPFUL BUT IS NOT REQUIRED

i. Calculate the following:

a. The pension charge to profit and loss

b. The total re-measurement adjustment

c. The funded status at December 31, 2022

ii. Prepare the 2022 journal entries to account for the pension plan

iii. Describe how the accounting for this pension plan would differ under the Accounting Standards for Private Enterprise (ASPE).