Latoya Company provides the following selected information related to its define
ID: 2379782 • Letter: L
Question
Latoya Company provides the following selected information related to its defined benefit pension plan for 2012.
(a) Compute pension expense for 2012.
Prepare the journal entry to record pension expense and the employer
Pension asset/liability (January 1) $25,000 Cr. Accumulated benefit obligation (December 31) 400,000 Actual and expected return on plan assets 10,000 Contributions (funding) in 2012 150,000 Fair value of plan assets (December 31) 800,000 Settlement rate 10 % Projected benefit obligation (January 1) 700,000 Service cost 80,000Explanation / Answer
a)
Computation of Pension Expense:
Service Expense 80,000
Interest Cost (700,000*.10)= 70,000
Expected Return on Plan Assets (10,000)
Pension Expense 80,000 + 70,000 - 10,000 = 140,000
Pension Expense 140,000
Pension Asset/Liability 10,000
Cash 150,000
b)
Income Statement:
Pension Expense 140,000
Balance Sheet:
Pension Liability (25,000-10,000) = 15,000
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