The following pension-related data pertain to Metro Recreation\'s noncontributor
ID: 2394404 • Letter: T
Question
The following pension-related data pertain to Metro Recreation's noncontributory, defined benefit pension plan for 2018:
Required:
Prepare a pension spreadsheet that shows the relationships among the various pension balances, shows the changes in those balances, and computes pension expense for 2018. (Enter credit amounts with a minus sign and debit amounts with a positive sign. Enter your answers in thousands (i.e. 200,000 should be entered as 200).)
($ in 000s) Jan. 1 Dec. 31 Projected benefit obligation $ 5,200 $ 5,480 Accumulated benefit obligation 3,770 4,060 Plan assets (fair value) 6,180 6,625 Interest (discount) rate, 8% Expected return on plan assets, 10% Prior service cost?AOCI (from Dec. 31, 2017, amendment) 950 Net loss?AOCI 638 Average remaining service life: 10 years Gain due to changes in actuarial assumptions 60 Contributions to pension fund (end of year) 450 Pension benefits paid (end of year) 405Explanation / Answer
($ in 000s) PBO Plan Assets Prior Service Cost–AOCI Net Loss–AOCI Pension Expense Cash Net Pension (Liability) / Asset Balance, Jan. 1, 2018 -5200 6180 950 638 980 2 Service cost -329 329 -329 1 Interest cost -416 416 -416 3 Expected return on assets 618 -618 618 Adjust for: 4 Loss on assets -218 218 -218 Amortization of: 5 Prior service cost -95 95 6 Net loss -2 2 Gain on PBO 60 -60 60 Cash funding 450 -450 450 Retiree benefits 405 -405 Bal., Dec. 31, 2018 -5480 6625 855 794 224 1145 1 8% x $5,200 = $416 2 $5,480 – 5,200 – 416 + 60 + 405 = $329 3 10% x $6,180 = $618 (expected) 4 6625-6180-618-450+405 = -218 5 $950 ÷ 10 = $95 6 ($638 – 618) ÷ 10 = $2
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