Ex. 20-118—Measuring and recording pension expense.

Gregory, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2008:

 

 

January 1, 2008

December 31, 2008

 

Projected benefit obligation

$2,500,000

$2,850,000

 

Market-related asset value

1,250,000

1,600,000

 

Accumulated benefit obligation

1,930,000

2,620,000

 

Unrecognized net (gains) and losses

-0-

300,000

 

The service cost component for 2008 is $150,000 and the amortization of prior service cost is $240,000. The company's actual funding of the plan in 2008 amounted to $510,000. The expected return on plan assets and the settlement rate were both 8%.

Instructions

(a)Determine the pension expense to be reported in 2008.

(b)Prepare the journal entry to record pension expense and the employers' contribution to the pension plan in 2008.

Ex. 20-119—Measuring and recording pension expense.

Presented below is information related to Major Department Stores, Inc. pension plan for 2008.

 

Accumulated benefit obligation (at year-end)

$600,000

 

Service cost

520,000

 

Funding contribution for 2008

500,000

 

Settlement rate used in actuarial computation

10%

 

Expected return on plan assets

9%

 

Amortization of prior service cost

100,000

 

Amortization of unrecognized net gains

48,000

 

Projected benefit obligation (at beginning of period)

480,000

 

Market-related asset value (at beginning of period)

360,000

 

Instructions

(a) Compute the amount of pension expense to be reported for 2008. (Show computations.) (b) Prepare the journal entry to record pension expense and the employer's contribution for 2008.

 

 

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