Gottschalk Company Harrington Company Holtzman Company
SuperClass(Pension Expense, Journal Entries, Amortization of Loss) Gottschalk Company sponsors a de-
fined benefit plan for its 100 employees. On January 1, 2014, the company’s actuary provided the following information.
Accumulated other comprehensive loss (PSC) | $150,000 |
Pension plan assets (fair value and market-related asset value) | 200,000 |
Accumulated benefit obligation | 260,000 |
Projected benefit obligation | 380,000 |
The average remaining service period for the participating employees is 10 years. All employees are expected to receive benefits under the plan. On December 31, 2014, the actuary calculated that the pres- ent value of future benefits earned for employee services rendered in the current year amounted to
$52,000; the projected benefit obligation was $490,000; fair value of pension assets was $276,000; the accumulated benefit obligation amounted to $365,000. The expected return on plan assets and the dis- count rate on the projected benefit obligation were both 10%. The actual return on plan assets is $11,000. The company’s current year ’s contribution to the pension plan amounted to $65,000. No benefits were paid during the year.
Instructions
(a) Determine the components of pension expense that the company would recognize in 2014. (With only one year involved, you need not prepare a worksheet.)
(b) Prepare the journal entry to record the pension expense and the company’s funding of the pension plan in 2014.
(c) Compute the amount of the 2014 increase/decrease in gains or losses and the amount to be amor- tized in 2014 and 2015.
(d) Indicate the pension amounts r eported in the financial statement as of December 31, 2014.
(2- Y ear W orksheet) On January 1, 2014, Harrington Company has the following defined benefit pension plan balances.
Projected benefit obligation $4,500,000
Fair value of plan assets 4,200,000
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 $500,000 are created. Other data related to the pension plan are as follows.
Service cost | 2014 | 2015 | |
$150,000 | $180,000 | ||
Prior service cost amortization | –0– | 90,000 | |
Contributions (funding) to the plan | 240,000 | 285,000 | |
Benefits paid | 200,000 | 280,000 | |
Actual return on plan assets | 252,000 | 260,000 | |
Expected rate of return on assets | 6% | 8% |
(a) Prepare a pension worksheet for the pension plan for 2014 and 2015.
(b) For 2015, p r epa r e the journal entry to r eco r d pension- r elated amounts.
Holtzman Company is in the process of preparing its financial statements for 2012. Assume that no entries for depreciation have been recorded in 2012. The following information related to depreciation of fixed assets is provided to you.
| 1. | Holtzman purchased equipment on January 2, 2009, for $92,300. At that time, the equipment had an estimated useful life of 10 years with a $4,300 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2012, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2,100 salvage value. | |
| 2. | During 2012, Holtzman changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $400,000. It had a useful life of 10 years and a salvage value of $26,000. The following computations present depreciation on both bases for 2010 and 2011. |
2011 | 2010 | |||
| Straight-line | $37,400 | $37,400 | ||
| Declining-balance | 64,000 | 80,000 |
3.Holtzman purchased a machine on July 1, 2010, at a cost of $180,000. The machine has a salvage value of $10,000 and a useful life of 8 years. Holtzman’s bookkeeper recorded straight-line depreciation in 2010 and 2011 but failed to consider the salvage value. (a) Prepare the journal entries to record depreciation expense for 2012 and correct any errors made to date related to the information provided. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) |
11 years ago
Purchase the answer to view it
harrington_company_1440949114.docx- gottschalk_company_1440949114.docx
- holtzman_company_1440949114.docx
