20 Accounting for Pensions and Postretirement Benefits BRIEF EXERCISES 20
BRIEF EXERCISES
BE20-1 (L01) AMR Corporation (parent company of American Airlines) reported the following (in millions).
Service cost $366
Interest on P.B.O. 737
Return on plan assets 593
Amortization of prior service cost 13
Amortization of net loss 154
Compute AMR Corporation’s pension expense.
BE20-2 (L01) For Warren Corporation, year-end plan assets were $2,000,000. At the beginning of the year, plan assets were $1,780,000. During the year, contributions to the pension fund were $120,000, and benefits paid were $200,000. Compute Warren’s actual return on plan assets.
BE20-3 (L02) At January 1, 2017, Hennein Company had plan assets of $280,000 and a projected benefit obligation of the same amount. During 2017, service cost was $27,500, the settlement rate was 10%, actual and expected return on plan assets were $25,000, contributions were $20,000, and benefits paid were $17,500. Prepare a pension worksheet for Hennein Company for 2017.
BE20-4 (L02) Campbell Soup Company reported pension expense of $73 million and contributed $71 million to the pension fund. Prepare Campbell Soup Company’s journal entry to record pension expense and funding, assuming Campbell has no OCI amounts.
BE20-5 (L03) Mancuso Corporation amended its pension plan on January 1, 2017, and granted $160,000 of prior service costs to its employees. The employees are expected to provide 2,000 service years in the future, with 350 service years in 2017. Compute prior service cost amortization for 2017.
BE20-6 (L03) At December 31, 2017, Besler Corporation had a projected benefit obligation of $560,000, plan assets of $322,000, and prior service cost of $127,000 in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2017.
BE20-7 (L04) Shin Corporation had a projected benefit obligation of $3,100,000 and plan assets of $3,300,000 at January 1, 2017. Shin also had a net actuarial loss of $465,000 in accumulated OCI at January 1, 2017. The average remaining service period of Shin’s employees is 7.5 years. Compute Shin’s minimum amortization of the actuarial loss.
BE20-8 (L05) Hawkins Corporation has the following balances at December 31, 2017.
Projected benefit obligation $2,600,000
Plan assets at fair value 2,000,000
Accumulated OCI (PSC) 1,100,000
How should these balances be reported on Hawkins’ balance sheet at December 31, 2017?
BE20-9 (L05) Norton Co. had the following amounts related to its pension plan in 2017.
Actuarial liability loss for 2017 $28,000
Unexpected asset gain for 2017 18,000
Accumulated other comprehensive income (G/L) (beginning balance) 7,000 Cr.
Determine for 2017 (a) Norton’s other comprehensive income (loss) and (b) comprehensive income. Net income for 2017 is $26,000; no amortization of gain or loss is necessary in 2017.
BE20-10 (L05) Lahey Corp. has three defined benefit pension plans as follows.
Pension Assets Projected Benefit
(at Fair Value) Obligation
Plan X $600,000 $500,000
Plan Y 900,000 720,000
Plan Z 550,000 700,000
How will Lahey report these multiple plans in its financial statements?
BE20-11 (L06,7) Manno Corporation has the following information available concerning its postretirement benefit plan for 2017.
Service cost $40,000
Interest cost 47,400
Actual and expected return on plan assets 26,900
Compute Manno’s 2017 postretirement expense.
**BE20-12 (L06,7) For 2017, Sampsell Inc. computed its annual postretirement expense as $240,900. Sampsell’s contribution to the plan during 2017 was $180,000. Prepare Sampsell’s 2017 entry to record postretirement expense, assuming Sampsell has no OCI amounts.
