The company introduced a pension plan at the beginning of 2019. Past service costs were paid in
Question:
The company introduced a pension plan at the beginning of 2019. Past service costs were paid in full in the amount of $2 million. Current service costs for 2019 were $500,000 and were not funded in the year. Amounts funded were the only amounts included in pension expense (operating expense). The actual return on plan assets was 9% and the discount rate used 7% for the pension plan obligation, which is equivalent to the expected return on plan assets. Only funding is recognized by CRA as tax-deductible. No benefits were paid because there were no retirees as of December 31, 2019. Company reports under IFRS.
Income Statement (Partial)
Expenses:
Pension $2,000,000
Operating $28,000,000
Please prepare Journal entries for this transaction. (Canadian pension plan)