Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2018 and 2019 are presented below ($ in millions): Information

The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2018 and 2019 are presented below ($ in millions): Information Provided by Pension Plan Actuary:

Projected benefit obligation as of December 31, 2017 = $2,600.

Prior service cost from plan amendment on January 2, 2018 = $800 (straight-line amortization for 10-year average remaining service period).

Service cost for 2018 = $600.

Service cost for 2019 = $650

Discount rate used by actuary on projected benefit obligation for 2018 and 2019 = 10%.

Payments to retirees in 2018 = $460.

Payments to retirees in 2019 = $530.

No changes in actuarial assumptions or estimates. Net gainAOCI on January 1, 2018 = $350.

Net gains and losses are amortized for 10 years in 2018 and 2019

Information Provided by Pension Fund Trustee: Plan asset balance at fair value on January 1, 2018 = $1,900.

2018 contributions = $620.

2019 contributions = $670.

Expected long-term rate of return on plan assets = 12%.

2018 actual return on plan assets = $170.

2019 actual return on plan assets = $220.

Required

: 1. Calculate pension expense for 2018 and 2019.

2. Prepare the journal entries for 2018 and 2019 to record pension expense.

3. Prepare the journal entries for 2018 and 2019 to record any gains and losses and new prior service cost.

4. Prepare the journal entries for 2018 and 2019 to record the cash contribution to plan assets and benefit payments to retirees.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting International Edition

Authors: Jeffrey Waybright, Robert Kemp

1st Edition

0137067798, 978-0137067794

More Books

Students also viewed these Accounting questions