TAN Company has a defined benefit pension plan for its employees. The plan has been in existence for several years. During $2018,$ for the first time, TAN experienced a difference between its expected and actual projected benefit obligation. This resulted in a cumulative $$experience$$ loss of $$29,000$ at the end of $2018,$ which it recorded and which did not change during $2019.$ TAN amortizes any excess loss by the straight$-$line method over the average remaining service life of its active participating employees. It has developed the following schedule concerning these $40$ employees:

Employee

Expected Years

Employee

Expected Years

Numbers

of Future Service$*$

Numbers

Future Service$*$

$153212515$

$6106263018$

$11159313521$

$162012364024$

$*$Per employee

TAN makes its contribution to the pension plan at the end of each year. However, it has not always funded the entire pension expense in a given year. As a result, it had an accrued pension cost liability of $$65,000$ on December $31,2018.$

In addition to the preceding information, the following set of facts for $2019$ and $2020$ has been assembled, based on information provided by TAN$$s actuary and funding agency, and obtained from its accounting records:

$2019$

$2020$

Plan assets, fair value $(12/31)$ $$620,500$ $$860,550$

Cumulative net loss $(1/1)29,00029,000$

Expected $($and actual$)$ return on plan assets $40,50062,050$

Company contribution to pension plan $(12/31)175,000178,000$

Projected benefit obligation $(1/1)470,000*686,000$

Discount rate $10\%10\%$

Service cost $169,000175,000$

Plan assets, fair value $(1/1)405,000620,500$

$*$Includes the cumulative net loss at the end of $2018.$

Required:

$1.$ Calculate the average remaining service life of TAN$$s employees.

$2.$ Prepare a schedule to compute the net gain or loss component of pension expense for $2019$ and $2020,$ assuming that the company uses the corridor approach. For simplicity, assume the average remaining life calculated in Requirement $1$ is applicable to both years.

$3.$ Prepare a schedule to compute the pension expense for $2019$ and $2020.$

$4.$ Prepare all the journal entries related to TAN$$s pension plan for $2019$ and $2020.$

$5.$ What is TAN$$s total accrued$/$prepaid pension cost at the end of $2019?$ Is it an asset or liability?

Amount Descriptions

Expected return on plan assets

Interest cost on projected benefit obligation

Pension expense

Service cost

$1.$ Calculate the average remaining service life of TAN$$s employees

Additional Instruction

years

$2.$ Prepare a schedule to compute the net gain or loss component of pension expense for $2019$ and $2020,$ assuming that the company uses the corridor approach. For simplicity, assume the average remaining life calculated in Requirement $1$ is applicable to both years.

Additional Instruction

TAN COMPANY

Net Gain $/$ Loss

$2019-2020$

$1$

Year

Cumulative Net Loss

Corridor

Excess Net Loss

Amortized Net Loss $($Gain$)$

$2$

$2019$

$3$

$2020$

$3.$ Prepare a schedule to compute the pension expense for $2019$ and $2020.$

Additional Instruction

TAN COMPANY

Pension Expense Calculations

$2019-2020$

$1$

$2019$

$2020$

$2$

$3$

$4$

$5$

$4.$ Prepare the entries to record pension expense for $2019$ and $2020$ on December $31$ of each year.

General Journal Instructions

PAGE $2019$PAGE $2020$

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

$5.$ What is TAN$$s total accrued$/$prepaid pension cost at the end of $2019?$

$

Is it an asset or liability?