P20-2 (3-Year Worksheet, Journal Entries, and Reporting)
P20-3 (Pension Expense, Journal Entries, Amortization of Loss) Gottschalk Company sponsors a defined benefit plan for its 100
employees. On January 1, 2014, the companys actuary provided t
Differentiate between accounting for the employer and accounting for the pension fund.
The employer is the organization sponsoring the pension plan. The employer incurs the costs and
makes contributions to the pension fund. Accounting fo
Keeton Company sponsors a defined benefit pension plan for its 600 employees. The companys
actuary provided the following information about the plan.
The average remaining service life per employee is 10.5 years. The service cost component of
What is the role of an actuary relative to pension plans?
What are actuarial assumptions?
An actuarys role is to ensure that the company has established an appropriate funding pattern to
meet its pension obligations, to make predictions
Differentiate between a defined contribution pension plan and a defined benefit pension plan.
Explain how the employers obligation differs between the two types of plans.
A defined-contribution plan specifies the employers contribution t
Thinken Technology recently merged with College Electronix (CE), a computer graphics
manufacturing firm. In performing a comprehensive audit of CEs accounting system, Gerald
Ott, internal audit manager for Thinken Technology, discovered that the
Jack Kelly Company has grown rapidly since its founding in 2004. To instill loyalty in its
employees, Kelly is contemplating establishment of a defined benefit plan. Kelly knows that
lenders and potential investors will pay close attention to th
Henning Company sponsors a defined benefit pension plan for its employees. The following data
relate to the operation of the plan for the year 2014 in which no benefits were paid.
1. The actuarial present value of future benefits earned by emplo
What is meant by prior service cost? When is prior service cost recognized as pension
When a defined-benefit plan is either initiated or amended, credit is often given to employees for
years of service provided before the date o
The accounting staff of Holder Inc. has prepared the following postretirement benefit worksheet.
Unfortunately, several entries in the worksheet are not decipherable. The company has asked
your assistance in completing the worksheet and completi
The following defined pension data of Doreen Corp. apply to the year 2014.
For 2014, prepare a pension worksheet for Doreen Corp. that shows the journal entry for pension
expense and the year-end balances in the related pension acco
Describe the accounting for actuarial gains and losses.
Actuarial gains or losses arise from (1) asset gains or losses (when the expected return is
different than the actual return on plan assets) and (2) a liability gain or loss (when a
Explain how cash-basis accounting for pension plans differs from accrual-basis accounting for
pension plans. Why is cash-basis accounting generally considered unacceptable for pension plan
Cash-basis accounting recognizes pen
The financial statements of Marks and Spencer plc (M&S) are available at the books
companion website or can be accessed at
Latoya Company provides the following selected information related to its defined benefit
pension plan for 2014.
(a) Compute pension expense and prepare the journal entry to record pension expense and the
employers contribution to t
Describe the reporting of pension plans for a company with multiple plans, some of which are
underfunded and some of which are overfunded.
Multiple plans may be combined and shown as one amount on the balance sheet, only if they are
Taveras Enterprises provides the following information relative to its defined benefit pension
(a) Prepare the note disclosing the components of pension expense for the year 2014.
(b) Determine the amounts of other comprehensi
Erickson Company sponsors a defined benefit pension plan. The corporations actuary provides
the following information about the plan.
(a) Compute the actual return on the plan assets in 2014.
(b) Compute the amount of the other comp
Jill Vogel and Pete Dell have to do a class presentation on GAAP rules for reporting pension
information. In developing the class presentation, they decided to provide the class with a series
of questions related to pensions and then discuss the
The actuary for the pension plan of Gustafson Inc. calculated the following net gains and losses.
Other information about the companys pension obligation and plan assets is as follows.
Gustafson Inc. has a stable labor force of 400 employees who
Villa Company has experienced tough competition, leading it to seek concessions from its
employees in the companys pension plan. In exchange for promises to avoid layoffs and wage
cuts, the employees agreed to receive lower pension benefits in t
The following defined pension data of Rydell Corp. apply to the year 2014.
For 2014, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension
expense and the year-end balances in the related pension acco
The following facts apply to the pension plan of Boudreau Inc. for the year 2014.
Using the preceding data, compute pension expense for the year 2014. As part of your solution,
prepare a pension worksheet that shows the journal entr
Hiatt Toothpaste Company initiates a defined benefit pension plan for its 50 employees on
January 1, 2014. The insurance company which administers the pension plan provided the
following selected information for the years 2014, 2015, and 2016.
Determine the meaning of the following terms.
(a) Contributory plan.
(b) Vested benefits.
(c) Retroactive benefits.
(d) Years-of-service method.
A contributory plan is a pension plan under which employees contribute part of the cost.
Why didnt the FASB cover both types of postretirement benefitspensions and healthcarein
the earlier pension accounting rules?
The FASB did not cover both pensions and healthcare benefits in the earlier pension accounting
rules because of
In examining the costs of pension plans, Helen Kaufman, CPA, encounters certain terms. The
components of pension costs that the terms represent must be dealt with appropriately if
generally accepted accounting principles are to be reflected in t
What are the major differences between postretirement healthcare benefits and pension benefits?
The major differences between pension benefits and postretirement benefits are listed below:
Differences between Postretirement Healthcare Be
Given the following items and amounts, compute the actual return on plan assets: fair value of
plan assets at the beginning of the period $9,500,000; benefits paid during the period $1,400,000;
contributions made during the period $1,000,000; an
Using the information in E20-22,
prepare a worksheet inserting January 1, 2014, balances, showing December 31, 2014, balances,
and the journal entry recording postretirement benefit expense.
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