Harrison Forklift\'s pension expense includes a service cost of $17 million. Har
ID: 2713986 • Letter: H
Question
Harrison Forklift's pension expense includes a service cost of $17 million. Harrison began the year with a pension liability of $42 million (underfunded pension plan). 1. Interest cost, $13; expected return on assets, $11; amortization of net loss, $3. 2. Interest cost, $13; expected return on assets, $10; amortization of net gain, $3. 3. Interest cost, $13; expected return on assets, $10; amortization of net loss, $3; amortization of prior service cost, $4 million. Required: Prepare the appropriate general journal entries to record Harrison’s pension expense in each of the following independent situations regarding the other components of pension expense ($ in millions): (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Explanation / Answer
Answer: Journal Entries:
Event 1 Pension expense A/C Dr. $22
Plan assets A/C Dr. $11
To PBO A/C $30
To Amortization of net loss-OCI A/C $3
Event 2 Pension expense A/C Dr.$17
Plan assets A/C Dr. $ 10
Amortization of net gain- OCI A/C Dr. $3
To PBO A/C $30
Event 3 Pension expense A/C Dr.$27
Plan assets A/C Dr. $10
To PBO A/C $30
To Amortization of net loss-OCI A/C $3
To Amortization of prior service cost-OCI A/C $4
1. PBO ($17 service cost + $13 interest cost) = 30
2. PBO ($17 service cost + $13 interest cost) = 30
3. PBO ($17 service cost + $13 interest cost) = 30
The amortization amounts are reported as other comprehensive income in the statement of comprehensive income.
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