The following information is available for Argust Corporation’s pension plan for the 2011 fiscal year:
Accrued benefit obligation, 1/1/11, accounting basis...... $315,000
Accrued benefit obligation, 1/1/11, funding basis .......255,000
Fair value of plan assets, 1/1/11 .............297,000
Service cost .................... 63,000
Discount rate ..................... 10%
Expected return on plan assets .............. 7%
Actual return on plan assets .............. 8%
Contributions (funding) ................. 79,200
Benefits paid to retirees ................. 43,200
On January 1, 2011, Argust Corp. amended its pension plan, resulting in past service costs with a present value of $140,400. The amendment of the pension plan is expected to provide future benefits for five years.
Instructions
(a) Identify the plan’s funded status and the asset or liability reported on the December 31, 2011 balance sheet assuming that Argust Corp. accounts for its pension using the deferral and amortization approach.
(b) Calculate pension expense for 2011 assuming that Argust Corp. accounts for its pension with the deferral and amortization approach.
(c) Identify the plan’s funded status and the asset or liability reported on the December 31, 2011 balance sheet assuming that Argust Corp. accounts for its pension with the immediate recognition approach.
(d) Calculate pension expense for 2011, assuming that Argust Corp. accounts for its pension with the immediate recognition approach.