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

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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 $ 0 $ 0 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 OCI—Prior 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.
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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 0 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)
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