Tucker, Inc. on January 1, 2018 initiated a noncontributory, defined-benefit pen

Question

Tucker, Inc. on January 1, 2018 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 104 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 104 employees who are expected to receive benefits under the plan is 1,248. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2018 was $5,568,000. On December 31, 2018 the following information was provided concerning the pension plan's operations for its first year.
Employer's contribution at end of year $1,640,000 Service cost 640,000 Projected benefit obligation 6,581,600 Plan assets (at fair value) 1,640,000 Expected return on plan assets 9% Settlement rate 8% Tucker, Inc. on January 1, 2018 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 104 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 104 employees who are expected to receive benefits under the plan is 1,248. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2018 was $5,568,000. On December 31, 2018 the following information was provided concerning the pension plan's operations for its first year.
Employer's contribution at end of year $1,640,000 Service cost 640,000 Projected benefit obligation 6,581,600 Plan assets (at fair value) 1,640,000 Expected return on plan assets 9% Settlement rate 8% Open Show Work SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS Account Titles and Explanation Debit Credit Tucker, Inc. on January 1, 2018 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 104 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 104 employees who are expected to receive benefits under the plan is 1,248. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2018 was $5,568,000. On December 31, 2018 the following information was provided concerning the pension plan's operations for its first year.
Employer's contribution at end of year $1,640,000 Service cost 640,000 Projected benefit obligation 6,581,600 Plan assets (at fair value) 1,640,000 Expected return on plan assets 9% Settlement rate 8%

Explanation / Answer

1. Calculation of pension cost:

2. Journal:

Current service cost        640,000.00 Interest on projected benefit obligation
(5568000*0.08)        445,440.00 Amortization of prior service cost
(5568000/(1248/104))        464,000.00 Pension expense for year 2018    1,549,440.00

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