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Unformatted text preview: IN-CLASS PENSION ACCOUNTING EXAMPLEFACTS:200720082009Service cost400,000 420,000 432,000 Interest rate on PBO10%10%10%Expected return of pension trust assets11%11%11%Actual return of pension fund assets0 81,000 170,520 Prior service cost200,000 Actuarial liability increase500,000 Employer contribution made at year end675,000 685,000 700,000 Benefits paid at year end20,000 20,000 Average remaining service life20 20 20 Requirement:Record the effects of the above facts in the accounts of the company and also show how the pension plan's balance sheet is affected. The textbook refers to this as a "pension worksheet."IN-CLASS PENSION ACCOUNTING EXAMPLESOLUTIONGENERAL JOURNAL ENTRIES OF COMPANYMEMO RECORDAccumulated otherAnnualcomprehensive incomePensionPensionPensionPSActuarialasset/Plan BenefitexpenseCashcostsgain/lossliabilityassetsObligation2007 Prior service costs (1)200,000 (200,000)(200,000)Service cost (2)400,000 (400,000)(400,000)Interest cost (2)20,000 (20,000)(20,000)Amortize PSC (2)...
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This note was uploaded on 07/17/2011 for the course ACC 306 taught by Professor Rogero during the Summer '11 term at University of Dayton.
- Summer '11