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Brief Exercise 20-3

At January 1, 2014, Hennein Company had plan assets of $290,800 and a projected benefit obligation of the same amount. During 2014, service cost was $28,930, the settlement rate was 10%, actual and expected return on plan assets were $29,070, contributions were $24,250, and benefits paid were $21,950.

Prepare a pension worksheet for Hennein Company for 2014.

HENNEIN COMPANY

General Journal Entries

Memo Record

Items

Pension
Expense

Cash

Pension
Asset/Liability

Projected
Benefit
Obligation

Plan
Assets

1/1/14

[removed]

Service cost

[removed]

Interest cost

[removed]

Actual return

[removed]

Contributions

[removed]

Benefits

[removed]

Journal entry 12/31/14

[removed]

Ending Balances

[removed]

Brief Exercise 20-4

For 2012, Campbell Soup Company had 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Enter amounts in millions. Ex: 10,000,000 is to be imputed as 10, eliminating the 000,000.)

Account Titles and Explanation	Debit	Credit
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]

Brief Exercise 20-9

Norton Co. had the following amounts related to its pension plan in 2014.

Actuarial liability loss for 2014	$29,530
Unexpected asset gain for 2014	19,830
Accumulated other comprehensive income (G/L) (beginning balance)	7,770	Cr.

Determine for 2014: (a) Norton’s other comprehensive income (loss), and (b) comprehensive income. Net income for 2014 is $27,380; no amortization of gain or loss is necessary in 2014. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

(a)		Other comprehensive income (loss)		$ [removed]
(b)		Comprehensive income		$ [removed]

Exercise 20-1 (Part Level Submission)

The following information is available for the pension plan of Radcliffe Company for the year 2014.

Actual and expected return on plan assets	$ 18,390
Benefits paid to retirees	48,900
Contributions (funding)	93,130
Interest/discount rate	11	%
Prior service cost amortization	8,200
Projected benefit obligation, January 1, 2014	607,100
Service cost	73,410

(a)

Compute pension expense for the year 2014.

Pension expense for 2014

[removed]

(b)

Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]

Exercise 20-6

Gingrich Importers provides the following pension plan information.

Fair value of pension plan assets, January 1, 2014		$2,434,500
Fair value of pension plan assets, December 31, 2014		2,870,600
Contributions to the plan in 2014		283,100
Benefits paid retirees in 2014		354,900

From the data above, compute the actual return on the plan assets for 2014.

Actual return on plan assets for 2014

[removed]

Exercise 20-18 (Part Level Submission)

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 2014.

(a)

Determine the missing amounts in the 2014 pension worksheet, indicating whether the amounts are debits or credits.

Pension Worksheet—Usher Inc.

General Journal Entries

Memo Record

Annual Pension
Expense

Cash

OCI—Prior
Service Cost

OCI—Gain/
Loss

Pension Asset/
Liability

Projected Benefit
Obligation

Plan
Assets

Balance, Jan. 1, 2014

$1,695

[removed]

$4,315

[removed]

$2,620

[removed]

Service cost

[removed]

771

[removed]

Interest cost

[removed]

431

[removed]

Actual return

[removed]

339

[removed]

Unexpected gain

231

[removed]

Amortization of PSC

[removed]

$85

[removed]

Contributions

$1,233

[removed]

1,233

[removed]

Benefits

308

[removed]

308

[removed]

Liability increase

[removed]

562

[removed]

Journal entry

[removed]

Accumulated OCI, Dec. 31, 2013

1,695

[removed]

Balance, Dec. 31, 2014

$1,610

[removed]

$331

[removed]

$1,887

[removed]

$5,771

[removed]

$3,884

[removed]

(b)

Prepare the journal entry to record 2014 pension expense for Usher Inc. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]

Problem 20-1 (Part Level Submission)

On January 1, 2014, Harrington Company has the following defined benefit pension plan balances.

Projected benefit obligation		$4,510,000
Fair value of plan assets		4,219,800

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends its pension agreement so that prior service costs of $508,200 are created. Other data related to the pension plan are as follows.

	2014		2015
Service cost	$153,600		$199,100
Prior service cost amortization	–0–		98,100
Contributions (funding) to the plan	243,800		306,000
Benefits paid	203,400		292,600
Actual return on plan assets	253,188		272,200
Expected rate of return on assets	6	%	8	%

(a)

Prepare a pension worksheet for the pension plan for 2014 and 2015.

HARRINGTON COMPANY
Pension Worksheet—2014 and 2015

General Journal Entries

Memo Record

Items

Annual Pension
Expense

Cash

OCI—Prior
Service Cost

OCI—Gain/
Loss

Pension Asset/
Liability

Projected Benefit
Obligation

Plan
Assets

Balance, Jan. 1, 2014

[removed]

Service cost

[removed]

Interest cost

[removed]

Actual return

[removed]

Contributions

[removed]

Benefits

[removed]

Journal entry for 2014

[removed]

Accumulated OCI, Dec. 31, 2013

[removed]

Balance, Dec. 31, 2014

[removed]

Additional PSC, 1/1/2015

[removed]

Balance, Jan. 1, 2015

[removed]

Service cost

[removed]

Interest cost

[removed]

Actual return

[removed]

Unexpected loss

[removed]

Amortization of PSC

[removed]

Contributions

[removed]

Benefits

[removed]

Journal entry for 2015

[removed]

Accumulated OCI, Dec. 31, 2014

[removed]

Balance, Dec. 31, 2015

[removed]

(b)

For 2015, prepare the journal entry to record pension-related amounts. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]
[removed]	[removed]	[removed]

IFRS True False Question 04

Under IFRS companies may recognize actuarial gains and losses in income immediately.

True

False

Answer:

IFRS Multiple Choice Question 06

The International Accounting Standards Board has proposed changes to IFRS pension accounting including all of the following except

a.	a new category of pensions for accounting purpose – “contribution-based promises.”

b.	requiring recognition of actuarial gains and losses over the expected service lives of employees.

c.	elimination of smoothing via the corridor approach.

d.	different presentation of pension costs in the income statement.

Answer:

IFRS Multiple Choice Question 09

Which of the following is true with regard to pension accounting under U.S. GAAP and IFRS?

a.	Prior service cost is recognized on the balance sheet under both U.S. GAAP and IFRS.

b.	Prior service cost is amortized into income over the expected service lives of employees under U.S. GAAP but not under IFRS.

c.	Accounting for defined-benefit pensions is typically a less important issue in the U. S. than in other parts of the world.

d.	The accounting for defined-benefit pension plans is the same under U.S. GAAP and IFRS.

Answer:

IFRS Multiple Choice Question 10

Pension liabilities will be impacted in countries where population aging is an issue. Which of the following countries/areas is the most rapidly aging in the developed world?

Europe

Japan

c.	United States

d.	All three areas are aging at the same approximate rate

Answer:

IFRS Multiple Choice Question 14

The IASB and the FASB are studying several issues related to accounting for pensions including all of the following except

a.	requiring companies to report various components of pension expense, such as interest cost, separately in the income statement along with other interest expense.