Erickson Company sponsors a defined benefit pension plan. The corporation\'s act

Question

Erickson Company sponsors a defined benefit pension plan. The corporation's actuary provides the following information about the plan Vested benefit obligation Accumulated benefit obliga Projected benefit obligation Plan assets (fair value) Settlement rate and expected rate of return Pension asset/liability Service cost for the year 2014 Contributions (funding in 2014) Benefits paid in 2014 January 1, 2014 $3,060 2,230 2,030 1,190 December 31, 2014 $2,230 4,570 3,260 2,610 10% tion 840 420 860 290

Explanation / Answer

Part A

Liability increase = 3260-2030-203-420+290= 897

Actual return= 2610 - 1190-860+290 =850

Unexpected gain =actual return-119 =850-119=731

Part B balance sheet

Long-term liabilities

Pension liability (2030-1190-668). 172

Stockholders' equity

Accumulated other comprehensive loss (G/L) 166

Date Accounts debit credit 31 Dec 2014 other comprehensive income (G/L) 166 Pension expense 26 Pension asset/liability 668 Cash 860

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