intermediate accounting 2 topic 5
dlc523
interacc.t5.docxPrepare your answers in an Excel workbook, using one worksheet per exercise or problem.
E 20-19 (Postretirement Benefit Expense Computation)
Kreter Co. provides the following information about its postretirement benefit plan for the year 2014.
Service cost $ 45,000
Contribution to the plan 10,000
Actual and expected return on plan assets 11,000
Benefi ts paid 20,000
Plan assets at January 1, 2014 110,000
Accumulated postretirement benefi t obligation
at January 1, 2014 330,000
Discount rate 8%
Instructions
Compute the postretirement benefit expense for 2014.
P20-8 (Comprehensive 2-Year Worksheet) Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2014 and 2015.
2014 2015
Projected benefit obligation, January 1 $600,000
Plan assets (fair value and market-related value), January 1 410,000
Pension asset/liability, January 1 190,000 Cr.
Prior service cost, January 1 160,000
Service cost 40,000 $ 59,000
Settlement rate 10% 10%
Expected rate of return 10% 10%
Actual return on plan assets 36,000 61,000
Amortization of prior service cost 70,000 50,000
Annual contributions 97,000 81,000
Benefits paid retirees 31,500 54,000
Increase in projected benefit obligation due to
changes in actuarial assumptions 87,000 –0–
Accumulated benefit obligation at December 31 721,800 789,000
Average service life of all employees 20 years
Vested benefit obligation at December 31 464,000
Instructions
(a) Prepare a pension worksheet presenting both years 2014 and 2015 and accompanying computations and amortization of the loss (2015) using the corridor approach.
(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year.
(c) For 2015, indicate the pension amounts reported in the financial statements.
