The Drew Lewis Restaurants, Inc., provided the following information related to

Question

The Drew Lewis Restaurants, Inc., provided the following information related to its defined-benefit plan for the current year: Current Year Prior Year DesTIption Beginning plan assets at fair value (equal to the market-related asset value) Beginning projected benefit obligation Service cost Settlement rate Expected return on plan assets Actual return on plan assets Contributions for the year Benefits paid during the year Amortization of prior service cost Beginning balance of accumulated other comprehensive income due to .Unamortized prior service cost Solve Solve $110 10% 8% 276 150 850 260 $6,400 4,600 200 10% 8% 432 818 450 180 Solve Solve 5 years 1,060 240 5 years Unamortized net actuarial losses Average remaining service life of employees Requirements ((HINT: You must analyze prior-year results in full in order to complete the following requirements.) a. Compute the pension cost for the current year. b. Determine the ending balances of the plan assets and the projected benefit obligation. c. Determine the ending balance in accumulated other comprehensive income related to unamortized prior service cost and unamortized net actuarial losses Prepare the journal entry to record the current year's pension cost.

Explanation / Answer

Prior year closing balances:

Net loss not amortised as under corridor approach no amount came for amortisation:

Current year workings:

A. pension cost= 275

B. Plan asset closing balance= 6776, PBO closinb balance= 4551

C. OCI- prior service cost balance= 620, OCI-Net loss balance= 620

D. Journal:

Difference between actual return and expected return goes to Net loss-OCI

Workings:

Particulars PBO Plan asset Net Asset /(Liability) Pension expense- Income statement Prior service cost- AOCI Net Loss AOCI Balance, Jan1 4,600 6,400 1,800 1060 240 Annual service cost 200 -200 200 Prior service cost amortisation 0 180 -180 Interest cost 10% 460 -460 460 Gain Amortisation 0 0 Gain/loss due to change in actuarial assumptions 0 0 Expected/ Acutal retun# 8% 432 432 -512 80 Plan amendment 0 Benefits paid -450 -450                  -   Annual funding 818 818 Closing Balances 4,810 7,200 2,390 328.00 880 320.00

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