Question
Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The remaining amortization period at December 31, 2016, for
Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The remaining amortization period at December 31, 2016, for prior service cost is 5 years. The average remaining service life of employees is 11 years at January 1, 2017, and 10 years at December 31, 2017. The AOCInet actuarial (gain) loss was zero at December 31, 2016. Turner smooths recognition of its gains and losses when computing its market-related value to compute expected return. Additional Information: December 31, Description 2017 2016 PBO $ 1,450,000 $ 1,377,000 ABO 1,425,000 1,350,000 Fair value of plan assets 1,395,000 1,085,000 Market-related value of plan assets (smoothed recognition) 1,369,000 1,085,000 AOCIprior service cost ? 292,000 Balance sheet pension asset (liability) ? (292,000 ) Service cost 117,400 Contribution 169,000 PBO actuarial gain 113,250 Benefit payments made None None Discount rate 5 % 5 % Expected rate of return 7 % 7 % Required: Compute the amount of prior service cost that would be amortized as a component of pension expense for 2017 and 2018. Compute the actual return on plan assets for 2017. Compute the unexpected net gain or loss on plan assets for 2017. Compute pension expense for 2017. Prepare the companys required pension journal entries for 2017. Compute the 2017 increase/decrease in AOCInet actuarial (gain) loss and the amount to be amortized in 2017 and 2018. Confirm that the pension asset (liability) on the balance sheet equals the funded status as of December 31, 2017.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started