Monty Company adopts acceptable accounting for its defined benefit pension plan
ID: 2567917 • Letter: M
Question
Monty Company adopts acceptable accounting for its defined benefit pension plan on January 1, 2016, with the following beginning balances: plan assets $201,800; projected benefit obligation $254,000. Other data relating to 3 years’ operation of the plan are as follows.
2016
2017
2018
(a)
Prepare a pension worksheet presenting all 3 years’ pension balances and activities. (Enter all amounts as positive.)
2016
2017
2018
Annual service cost $16,100 $18,900 $26,500 Settlement rate and expected rate of return 10 % 10 % 10 % Actual return on plan assets 17,900 22,150 24,400 Annual funding (contributions) 16,100 39,900 48,600 Benefits paid 14,300 16,000 21,000 Prior service cost (plan amended, 1/1/17) 159,700 Amortization of prior service cost 54,800 41,700 Change in actuarial assumptions establishesa December 31, 2018, projected benefit obligation of: 528,300
Explanation / Answer
In the present case changes in actuarial assumptions related gains and losses are recognied directly in income statement rather amortising as further information related to amortisation not given required under corridor approach. Similarly instead of actual return is considered in calculations insted of expected return as corridor approach required information not available, hence assumed that actual return to be considered.
Particulars Defined benefit obligation Plan asset Net Asset /(Liability) Pension expense /(income)- Income statement 2016 Opening balances 254,000 201,800 -52,200 Annual service cost 16,100 -16,100 16,100 Actual return on plan assets 17,900 17,900 -17,900 Benefits paid -14,300 -14,300 0 Annual funding 16,100 16,100 2016 Balances 255,800 221,500 -34,300 -1,800 2017 2017 Opening balance 255,800 221,500 -34,300 Annual service cost 18,900 -18,900 18,900 Actual return on plan assets 22,150 22,150 -22,150 Benefits paid -16,000 -16,000 0 Annual funding 39,900 39,900 Prior service cost 159,700 -159,700 Prior service cost amortisation 0 54,800 2017 Balances 418,400 267,550 -150,850 51,550 2018 2018 Opening balance 418,400 267,550 -150,850 Annual service cost 26,500 -26,500 26,500 Actual return on plan assets 24,400 24,400 -24,400 Benefits paid 21,000 21,000 0 Annual funding 48,600 48,600 Prior service cost amortisation 0 41,700 Change in actuarial assumptions 62,400 -62,400 62,400 2018 Balances 528,300 361,550 -166,750 106,200Related Questions
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