CH+20+Solutions - EXERCISE 20-2 Computation of pension...

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Unformatted text preview: EXERCISE 20-2 Computation of pension expense: Service cost................................................................ $ 90,000 Interest cost ($700,000 X 10%).................................. 70,000 Expected return on plan assets.................................. (64,000) Prior service cost amortization................................... 10,000 Pension expense for 2010.......................................... $106,000 EXERCISE 20-8 Corridor and Minimum Loss Amortization Year Projected Benefit Obligation (a) Plan Assets 10% Corridor Accumulated OCI (G/L) (a) Minimum Amortization of Loss 2009 $2,000,000 $1,900,000 $200,000 $ $ 2010 2,400,000 2,500,000 250,000 280,000 3,000(b) 2011 2,950,000 2,600,000 295,000 367,000(c) 6,000(d) 2012 3,600,000 3,000,000 360,000 372,000(e) 1,000(f) (a) As of the beginning of the year. (b) ($280,000 $250,000) 10 years = $3,000 (c) $280,000 $3,000 + $90,000 = $367,000 (d) ($367,000 $295,000) 12 years = $6,000 (e) $367,000 $6,000 + $11,000 = $372,000 (f) ($372,000 $360,000) 12 years = $1,000 EXERCISE 20-10 (a) WEBB CORP. Pension Worksheet General Journal Entries Memo Record Items Annual Pension Expense Ca sh OCIPrior Service Cost OCI Gain/Loss Pension Asset/ Liability Projected Benefit Obligation Balance, Jan. 1, 2010 120,000 Cr. 600,000 Cr. Service cost 90,000 Dr. 90,000 Cr. Interest cost 54,000 Dr. 54,000 Cr. Actual return 55,000 Cr. Unexpected gain** 3,000 Dr. 3,000 Cr. Amortization of PSC 19,000 Dr. 19,000 Cr. Liability increase 76,000 Dr. 76,000 Cr. Contributions 99 ,0 00 Cr . Benefits 85,000 Dr. Journal entry for 2010 111,000 Dr. 99 ,0 00 Cr . 19,000 Cr. 73,000 Dr. 66,000 Cr. Accumulated OCI, Dec. 31, 2009 100,000 Dr Balance, December 31, 2010 81,000 Dr. 73,000 Dr. 186,000 Cr. 735,000 Cr. (b) Journal Entry Pension expense 111,000 OCI gain/loss 73,000 Cash 99,000 OCI PSC 19,000 Pension asset/liability 66,000 EXERCISE 20-11 (a) Pension expense for 2010 composed of the following: Service cost.......................................................... $ 56,000 Interest on projected benefit obligation (9% X $900,000)............................................... 81,000 Expected return on plan assets.......................... (54,000) Amortization of prior service cost.........................Amortization of prior service cost....
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This note was uploaded on 11/20/2011 for the course ACCT 316 taught by Professor Debessay,a during the Spring '08 term at University of Delaware.

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CH+20+Solutions - EXERCISE 20-2 Computation of pension...

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