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Problem one: SSJ, Inc. received the following reports from the company's actuary and pension plan trustee (all dollars are in millions): Actuary Report-YRS Projected Benefit Obligation Balance as of 1/1/YR5 Service Cost Interest Cost Actuarial Gain due to Unusal Turnover Prior Service Aware YR5---Percent / YR increaed (on 12/31/YR5) Pension benefits paid Balance 12/31/YRS $1,000 200 40 (100) 200 (60) $ 1,280 $ Plan Trustee Report-YR5 Plan Assets as of 1/1/YR5 Actual Return on Plan assets (Loss) YR5 Funding YRS Benefits Paid Plan Assets as of 12/31/YR5 700 (10) 100 (60) 730 $ The general ledger accounts pertinent to the pension plan have the following balances as of the end of YR4 (beginning of YR5): General Ledger Account Balances 12/31/YR4 DR (CR) Plan Assets Projected Benefit Obligation AOCI-PSC AOCI-G/L 700 (1,000) 200 400 At the time prior service was awarded ten years ago the average remaining service life of the employee pool was 20 years. At the beginning of YR5 the average remaining service life for any gain or loss amortization is 10 years. The CFO has established an expected return on plan assets of 10%. The pension formula was modified as of 12/31/YR5 to provide additional retirement income to all employees retroactive for up to ten years of service. Required: a. 1. Calculate pension expense for YR5. Prepare schedules for any numbers that are not directly taken from the two reports. Be sure to number the schedules and refer to them in the pension expense calculation. 2. Journalize the pension expense you calculated above. 3. Prepare all additional required journal entries based on the: Actuaries Report b. Plan Trustee Report. 4. What is the end of YR5 balances in: a. Plan Asset. b. Projected Benefit Obligation. C. AOCI-PSC. d. AOCI-G/L Problem one: SSJ, Inc. received the following reports from the company's actuary and pension plan trustee (all dollars are in millions): Actuary Report-YRS Projected Benefit Obligation Balance as of 1/1/YR5 Service Cost Interest Cost Actuarial Gain due to Unusal Turnover Prior Service Aware YR5---Percent / YR increaed (on 12/31/YR5) Pension benefits paid Balance 12/31/YRS $1,000 200 40 (100) 200 (60) $ 1,280 $ Plan Trustee Report-YR5 Plan Assets as of 1/1/YR5 Actual Return on Plan assets (Loss) YR5 Funding YRS Benefits Paid Plan Assets as of 12/31/YR5 700 (10) 100 (60) 730 $ The general ledger accounts pertinent to the pension plan have the following balances as of the end of YR4 (beginning of YR5): General Ledger Account Balances 12/31/YR4 DR (CR) Plan Assets Projected Benefit Obligation AOCI-PSC AOCI-G/L 700 (1,000) 200 400 At the time prior service was awarded ten years ago the average remaining service life of the employee pool was 20 years. At the beginning of YR5 the average remaining service life for any gain or loss amortization is 10 years. The CFO has established an expected return on plan assets of 10%. The pension formula was modified as of 12/31/YR5 to provide additional retirement income to all employees retroactive for up to ten years of service. Required: a. 1. Calculate pension expense for YR5. Prepare schedules for any numbers that are not directly taken from the two reports. Be sure to number the schedules and refer to them in the pension expense calculation. 2. Journalize the pension expense you calculated above. 3. Prepare all additional required journal entries based on the: Actuaries Report b. Plan Trustee Report. 4. What is the end of YR5 balances in: a. Plan Asset. b. Projected Benefit Obligation. C. AOCI-PSC. d. AOCI-G/L
