Student Notes, Pensions(17)

Fo r e ac h trans ac tio n o r e ve nt the de bits m

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Fo r e ac h trans ac tio n o r e ve nt, the  de bits  m us t e q ual  the  c re dits  (if the y do n’t, yo u’ll m e s s  up).
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Chapter 20-17 The following defined pension data of Doreen Corp. apply to the year 2011. Using a Pension Worksheet Using a Pension Worksheet Using a Pension Worksheet Using a Pension Worksheet Pro je c te d be ne fit o blig atio n, 1/1/11 (be fo re  am e ndm e nt)  $560,000 Plan as s e ts , 1/1/11  546,200 Pe ns io n liability  13,800 O n January 1, 2011, Do re e n C o rp., thro ug h plan am e ndm e nt,      g rants  prio r s e rvic e  be ne fits  having  a pre s e nt value  o f  100,000 S e ttle m e nt rate   9% S e rvic e  c o s t  58,000 C o ntributio ns  (funding )  55,000 Ac tual (e xpe c te d) re turn o n plan as s e ts   52,280 Be ne fits  paid to  re tire e s   40,000 Prio r s e rvic e  am o rtizatio n fo r 2011  17,000 Instructions: Fo r 2011, pre pare  a pe ns io n wo rks he e t fo r Do re e n C o rp. that  s ho ws  the  jo urnal e ntry fo r pe ns io n e xpe ns e .
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Chapter 20-18 GENERAL JOURNAL ENTRI ES MEMO RECORD Prior Pension Project ed Pension Service Gain/ Asset / Benef it Plan I t ems Expense Cash Cost s Loss Liabilit y Obligat ion Asset s Dec. 31, 2010 Prior service cost s Adj. bal. 1/ 1/ 11 Service cost I nt erest cost Act ual ret urn Amort . of PSC Cont ribut ions Benef it s paid Journal ent ry AOCI 12/ 31/ 10 Dec. 31, 2011 OCI Using a Pension Worksheet Using a Pension Worksheet Using a Pension Worksheet Using a Pension Worksheet
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Chapter 20-19 C o m pany s ho uld no t re c o g nize  the   re tro ac tive  be ne fits   as   pe ns io n e xpe ns e  e ntire ly in the  ye ar o f am e ndm e nt.   Em plo ye r s ho uld re c o g nize  the  pe ns io n e xpe ns e  o ve r the   re m aining  s e rvic e  live s  o f the  e m plo ye e s  who  are   e xpe c te d to  be ne fit fro m  the  c hang e  in the  plan. Prior Service Costs Prior Service Costs Prior Service Costs Prior Service Costs Amortization Method: Board prefers a years-of-service method.  ASC 715 allows use of the straight-line method (almost all use straight-line  method).
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Chapter 20-20 Companies combine the  liability gains and losses  in the   s am e   Other Comprehensive Income  ac c o unt us e d fo r  asset gains and losses  (and als o  PS C ) The y ac c um ulate  the  as s e t and liability g ains  and lo s s e s   fro m  ye ar to  ye ar that are  no t am o rtize d in  Accumulated Other Comprehensive Income This  am o unt is  re po rte d o n the  balanc e  s he e t in the   s to c kho lde rs ’ e q uity s e c tio n. Gains and Losses Gains and Losses Gains and Losses Gains and Losses
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Chapter 20-21 Corridor Amortization FAS B inve nte d the   corridor approach fo r am o rtizing  the   unre c o g nize d ne t g ain o r lo s s  ac c um ulate d balanc e  whe n  it g e ts  to o  larg e  de fine d as  10%  o f the  larg e r o f the   be g inning  balanc e s  o f the   projected benefit obligation   o r the  m arke t-re late d value  o f the plan assets .  Any 
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