ain or the risk of loss from the assets contributed to the pension fun are borne

Question

ain or the risk of loss from the assets contributed to the pension fun are borne by the employee. Problem 10 Points Presented b elow is information pertaining to Dover Corporation's pension plan for 2012: Service Cost Employer contribution to the pension plan in 2012 Benefits paid to retirees in 2012 Actual rate of return on pension plan assets Settlement interest rate Projected Benefit Obligation 1-1-12 Fair value of pension Plan Assets 1-1-12 $ 420,000 510,000 130,000 159,000 10% $ 2,150,000 1,920,000 Required: 1. Compute the pension expense for 2012 2. Prepare the employer's journal entry to record pension expense

Explanation / Answer

Solution: (1) Computation of pension expense for 2012:

Note: Here, we have assumed that actual and expected rate of return on pension plan assets are same(equal).

(2) Employer's journal entry to record pension expense:

Particulars Amount($) Service cost 420,000 Add: Interest cost (2,150,000*10%) 215,000 Less: Actual(Expected) rate of return on pension plan assets (159,000) Pension Expense 476,000

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