1) Presented below is information related to Mariey inc. pension data for 2011 S

Question

1) Presented below is information related to Mariey inc. pension data for 2011 Service cost Amortization of unrecognized net loss Amortization of unrecognized prior service cost Actual return on plan assets 90,000 Projected benefit obligation at January 1,2011 Pian assets at January 1,2011 65,000 800,000 750,000 300,000 Contribution (funding) On January 1, 2011, Mariey inc., through plan amendment grants prior service cost benefits of 150,000 200,000 996 Benefits paid to retirees Settlement rate Expected rate of return 7% REQUIRED 1) Calculate pension expense for 2011 2) Prepare the journal to record the pension expense. 3) Determine the balance of the PBO and PA as of 12/31/11 4) What amount shouid be reported on the balance as pension asset/liability at 7 12/31/11

Explanation / Answer

1

Pension expense is 169,500.

2

Journal:

3

Balance of PBO and Plan assets, 882,000 and 765,000.

4

Net plan liability is 117,000

Items Annual pension expense Cash AOCI-PSC OCI loss Pension asset/liability Projected benefit obligation Plan assets Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Balance Jan 1, 2011 Dr Dr           50,000 Cr              8,00,000 Cr        7,50,000 Dr Service cost           60,000 Dr           60,000 Cr                 60,000 Cr Interest cost           72,000 Dr           72,000 Cr                 72,000 Cr PSC amortisation                    -   Dr                    -   Cr Return on plan assets           52,500 Cr             12,500 Cr           65,000 Dr            65,000 Dr OCI loss amortisation           90,000 Dr             90,000 Cr New prior service cost        1,50,000 Dr       1,50,000 Cr              1,50,000 Cr Loss due to change in acturial assumptions Dr                          -   Cr Contributions        1,50,000 Cr       1,50,000 Dr        1,50,000 Dr Benefits paid              2,00,000 Dr        2,00,000 Cr Jounral for 2011        1,69,500 Dr        1,50,000 Cr        1,50,000 Dr          1,02,500 Cr           67,000 Cr                 82,000 Cr            15,000 Dr Opening balance Jan 1, 2011                    -   Dr                      -   Dr           50,000 Cr              8,00,000 Cr        7,50,000 Dr Balance Dec 31, 2011        1,50,000 Dr          1,02,500 Cr       1,17,000 Cr              8,82,000 Cr        7,65,000 Dr

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