EXERCISES
E20-1 (L01,2) EXCEL (Pension Expense, Journal Entries) The following information is available for the pension plan of Radcliffe Company for the year 2017...
Instructions
(a) Compute pension expense for the year 2017.
(b) Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017.
E20-2 (L01,2,3) (Computation of Pension Expense) Veldre Company provides the following information about its defined benefit pension plan for the year 2017…
Instructions
Compute the pension expense for the year 2017.
E20-3 (L01,2,3) (Preparation of Pension Worksheet) Using the information in E20-2, prepare a pension worksheet inserting January 1, 2017, balances, showing December 31, 2017, balances, and the journal entry recording pension expense.
E20-4 (L01,2) (Basic Pension Worksheet) The following facts apply to the pension plan of Boudreau Inc. for the year 2017...
Instructions
Using the preceding data, compute pension expense for the year 2017. As part of your solution, prepare a pension worksheet that shows the journal entry for pension expense for 2017 and the year-end balances in the related pension accounts.
E20-5 (L03) (Application of Years-of-Service Method) Andrews Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2017 are as follows…
Instructions
Compute the amount of prior service cost amortization for the years 2017 through 2022 using the years-of-service method, setting up appropriate schedules.
E20-6 (L01) (Computation of Actual Return) Gingrich Importers provides the following pension plan information...
Instructions
From the data above, compute the actual return on the plan assets for 2017.
E20-7 (L01,2,3) EXCEL (Basic Pension Worksheet) The following defined pension data of Rydell Corp. apply to the year 2017…
Instructions
For 2017, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
E20-8 (L04) (Application of the Corridor Approach) Kenseth Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values for its pension plan assets...
Instructions
Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule.
E20-9 (L05) (Disclosures: Pension Expense and Other Comprehensive Income) Taveras Enterprises provides the following information relative to its defined benefit pension plan...
Instructions
(a) Prepare the note disclosing the components of pension expense for the year 2017.
(b) Determine the amounts of other comprehensive income and comprehensive income for 2017. Net income for 2017 is $35,000.
(c) Compute the amount of accumulated other comprehensive income reported at December 31, 2017.
E20-10 (L01,2,3,4) (Pension Worksheet) Webb Corp. sponsors a defined benefit pension plan for its employees. On
January 1, 2017, the following balances relate to this plan...
Instructions
(a) Using the data above, compute pension expense for Webb Corp. for the year 2017 by preparing a pension worksheet.
(b) Prepare the journal entry for pension expense for 2017.
E20-11 (L01,2,3,4,5) (Pension Expense, Journal Entries, Statement Presentation) Henning Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2017 in which no benefits were paid.
1. The actuarial present value of future benefits earned by employees for services rendered in 2017 amounted to $56,000.
2. The company’s funding policy requires a contribution to the pension trustee amounting to $145,000 for 2017.
3. As of January 1, 2017, the company had a projected benefit obligation of $900,000, an accumulated benefit obligation of $800,000, and a debit balance of $400,000 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $600,000 at the beginning of the year. The actual and expected return on plan assets was $54,000. The settlement rate was 9%. No gains or losses occurred in 2017 and no benefits were paid.
4. Amortization of prior service cost was $50,000 in 2017. Amortization of net gain or loss was not required in 2017.
Instructions
(a) Determine the amounts of the components of pension expense that should be recognized by the company in 2017.
(b) Prepare the journal entry or entries to record pension expense and the employer’s contribution to the pension trustee in 2017.
(c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year 2017.
E20-12 (L01,2,3,4,5) (Pension Expense, Journal Entries, Statement Presentation) Ferreri Company received the following selected information from its pension plan trustee concerning the operation of the company’s defined benefit pension plan for the year ended December 31, 2017…
Instructions
(a) Determine the amounts of the components of pension expense that should be recognized by the company in 2017.
(b) Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017.
(c) Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Ferreri Company for the year 2017.
E20-13 (L01,2,4) (Computation of Actual Return, Gains and Losses, Corridor Test, and Pension Expense) Erickson Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan...
Instructions
(a) Compute the actual return on the plan assets in 2017.
(b) Compute the amount of the other comprehensive income (G/L) as of December 31, 2017. (Assume the January 1, 2017, balance was zero.)
(c) Compute the amount of net gain or loss amortization for 2017 (corridor approach).
(d) Compute pension expense for 2017.
E20-14 (L01,2,4) (Worksheet for E20-13) Using the information in E20-13 about Erickson Company’s defined benefit pension plan, prepare a 2017 pension worksheet with supplementary schedules of computations. Prepare the journal entries at December 31, 2017, to record pension expense and related pension transactions. Also, indicate the pension amounts reported in the balance sheet.
E20-15 (L01,2,5) (Pension Expense, Journal Entries) Latoya Company provides the following selected information related to its defined benefit pension plan for 2017…
Instructions
(a) Compute pension expense and prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017. Preparation of a pension worksheet is not required. Benefits paid in 2017 were $35,000.
(b) Indicate the pension-related amounts that would be reported in the company’s income statement and balance sheet for 2017.
E20-16 (L04) (Amortization of Accumulated OCI (G/L), Corridor Approach, Pension Expense Computation) The actuary for the pension plan of Gustafson Inc. calculated the following net gains and losses...
Gustafson Inc. has a stable labor force of 400 employees who are expected to receive benefits under the plan. The total serviceyears for all participating employees is 5,600. The beginning balance of accumulated OCI (G/L) is zero on January 1, 2017. The market-related value and the fair value of plan assets are the same for the 4-year period. Use the average remaining service life per employee as the basis for amortization.
Instructions
(Round to the nearest dollar.)
Prepare a schedule which reflects the minimum amount of accumulated OCI (G/L) amortized as a component of net periodic pension expense for each of the years 2017, 2018, 2019, and 2020. Apply the “corridor” approach in determining the amount to be amortized each year.
E20-17 (L01,4,5) (Amortization of Accumulated OCI Balances) Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan.
…
The average remaining service life per employee is 10.5 years. The service cost component of net periodic pension expense for employee services rendered amounted to $400,000 in 2017 and $475,000 in 2018. The accumulated OCI (PSC) on January 1, 2017, was $1,260,000. No benefits have been paid.
Instructions
(Round to the nearest dollar.)
(a) Compute the amount of accumulated OCI (PSC) to be amortized as a component of net periodic pension expense for each of the years 2017 and 2018.
(b) Prepare a schedule which reflects the amount of accumulated OCI (G/L) to be amortized as a component of pension expense for 2017 and 2018.
(c) Determine the total amount of pension expense to be recognized by Keeton Company in 2017 and 2018.
E20-18 (L01,2,3,4) (Pension Worksheet—Missing Amounts) The accounting staff of Usher Inc. has prepared the following pension worksheet. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to the pension plan for 2017.
Instructions
(a) Determine the missing amounts in the 2017 pension worksheet, indicating whether the amounts are debits or credits.
(b) Prepare the journal entry to record 2017 pension expense for Usher Inc.
(c) The accounting staff has heard of a pension accounting procedure called “corridor amortization.” Is Usher required to record any amounts for corridor amortization in (1) 2017? In (2) 2018? Explain.
* E20-19 (L06,7) (Postretirement Benefit Expense Computation) Kreter Co. provides the following information about its postretirement benefit plan for the year 2017…
Instructions
Compute the postretirement benefit expense for 2017.
*E 20-20 (L06,7) (Postretirement Benefit Worksheet) Using the information in E20-19, prepare a worksheet inserting January 1, 2017, balances, and showing December 31, 2017, balances. Prepare the journal entry recording postretirement benefit expense.
* E20-21 (L06,7) (Postretirement Benefit Expense Computation) Garner Inc. provides the following information related to its postretirement benefits for the year 2017...
Instructions
Compute postretirement benefit expense for 2017.
*E 20-22 (L06,7) (Postretirement Benefit Expense Computation) Englehart Co. provides the following information about its postretirement benefit plan for the year 2017...
Instructions
Compute the postretirement benefit expense for 2017.
* E20-23 (L06,7) (Postretirement Benefit Worksheet) Using the information in E20-22, prepare a worksheet inserting es, showing December 31, 2017, balances, and the journal entry recording postretirement benefit expense.
* E20-24 (L06,7) (Postretirement Benefit Worksheet—Missing Amounts) The accounting staff of Holder Inc. has prepared the following postretirement benefit worksheet. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to the pension plan for 2017.
Instructions
(a) Determine the missing amounts in the 2017 postretirement worksheet, indicating whether the amounts are debits or credits.
(b) Prepare the journal entry to record 2017 postretirement expense for Holder Inc.
(c) What discount rate is Holder using in accounting for the interest on its other postretirement benefit plan? Explain.
