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Description
Computation of pension expense.
Preparation of pension worksheet.
Computation of actual return.
Application of the corridor approach.
Pension worksheet.
Computation of actual return, gains and losses, corridor test, and
pension expense.
Worksheet for E20-13.
Postretirement benefit expense computation.
Postretirement benefit worksheet.
2-year worksheet.
Level of
Time
Difficulty (minutes)
Simple
1015
Moderate
1525
Simple
1015
Moderate
2025
Moderate
2025
Complex
3545
Complex
Simple
Moderate
4050
1012
1520
Moderate
4050
$ 90,000
70,000
(64,000)
10,000
$106,000
Items
BICKNER COMPANY
Pension Worksheet2010
General Journal Entries
Annual
OCI
Pension
Prior Service
Pension
Expense
Cash
Cost
Asset/Liability
60,000 Cr.
Memo Record
Projected
Benefit
Obligation
Plan Assets
700,000 Cr.
90,000 Cr.
70,000 Cr.
64,000 Dr.
40,000 Dr.
105,000 Dr.
40,000 Cr.
820,000 Cr.
769,000 Dr.
9,000 Dr.
51,000 Cr.
**Note: We show actual return on the worksheet to ensure that plan assets are properly
reported. If expected and
actual return differ, then an additional adjustment is made to compute the proper amount of
pension expense.
***Pension Expense ....................................................
***Pension Asset/Liability ............................................
Other Comprehensive Income (PSC) .............
Cash.
640,000 Dr.
106,000
9,000
10,000
105,000
$2,725,000
2,400,000
325,000
$280,000
350,000
(70,000)
$ 395,000
$2,000,000
2,400,000
2,950,000
3,600,000
Plan
Assets
$1,900,000
2,500,000
2,600,000
3,000,000
10% Corridor
$200,000
250,000
295,000
360,000
Accumulated
OCI (G/L) (a)
$
0
280,000
367,000(c)
372,000(e)
Minimum
Amortization of
Loss
$
0
3,000(b)
6,000(d)
1,000(f)
Annual
Pension
Expense
Items
Balance, Jan. 1, 2010
Service cost
Interest cost*
Actual return
Unexpected gain**
Amortization of PSC
Liability increase
Contributions
Benefits
Journal entry for 2010
Accumulated OCI, Dec. 31, 2009
Balance, December 31, 2010
WEBB CORP.
Pension Worksheet
General Journal Entries
OCIPrior
Service
OCI
Cash
Cost
Gain/Loss
Pension
Asset/
Liability
Memo Record
Projected
Benefit
Obligation
Plan Assets
120,000 Cr.
90,000 Dr.
54,000 Dr.
55,000 Cr.
3,000 Dr.
19,000 Dr.
480,000 Dr.
55,000 Dr.
3,000 Cr.
19,000 Cr.
76,000 Dr.
76,000 Cr.
99,000 Cr.
111,000 Dr. 99,000 Cr.
19,000 Cr.
100,000 Dr
81,000 Dr.
73,000 Dr.
0
73,000 Dr.
85,000 Dr.
99,000 Dr.
85,000 Cr.
735,000 Cr.
549,000 Dr.
66,000 Cr.
186,000 Cr.
600,000 Cr.
90,000 Cr.
54,000 Cr.
Journal Entry
Pension Expense..111,000
Other Comprehensive Income (G/L) 73,000
Cash ..........................................................................
Other Comprehensive Income (PSC) ....................
Pension Asset /Liability ...........................................
99,000
19,000
66,000
(b)
$2,620
1,700
920
$700
200
500
$ 420
Computation of pension liability gains and losses and pension asset gains and losses.
1.
2.
2,620
2,370
(c)
Because no net gain or loss existed at the beginning of the period, no amortization
occurs. Therefore, the corridor calculation is not needed. An example of how the corridor would have
been computed is illustrated on the next page, assuming a net loss of $240 at the beginning of the
year.
(250)
$100
Plan
PBO
Assets (FV)
$2,500
$1,700
10%
Corridor
$250
Accumulated
OCI (G/L)
$240
Loss
Amortization
-0-
$ 400
250
(420)
250
$ 480
tems
Cash
OCI
Gain/Loss
Pension
Asset/Liability
800 Cr.
400 Dr.
250 Dr.
420 Cr.
250 Dr.
420 Dr.
250 Cr.
700 Cr.
480 Dr.
1,700 Dr.
700 Cr.
350 Dr.
100 Dr.
0
100 Dr.
(a)
$2,500 X 10%
$420 = ($2,620 $1,700) ($700 $200)
(c)
Actual return
Expected return ($1,700 X 10%)
Asset gain
(d)
$350 = $3,300 ($2,500 + $400 + $250 $200)
(b)
$420
170
$250
200 Dr.
350 Cr.
700 Dr.
200 Cr.
120 Dr.
680 Cr.
3,300 Cr.
2,620 Dr.
100
480
120
700
$680
Stockholders equity
Accumulated other comprehensive
loss (G/L) .....................................................
$100
$ 90,000
68,400
(62,000)
3,000
$ 99,400
Items
Balance, Jan. 1, 2010
Service cost
Interest cost
Actual return
Contributions
Benefits
Amortization of PSC
Journal entry for 2010
Accumulated OCI, Dec. 31, 2009
Balance, Dec. 31, 2010
*($760,000 X 9%)
Cash
OCIPrior
Service Cost
Memo Record
Postretirement
Asset/Liability
50,000 Cr.
90,000 Dr.
*68,400 Dr.
62,000 Cr.
56,000 Cr.
3,000 Dr.
99,400 Dr.
3,000 Cr.
56,000 Cr.
3,000 Cr.
100,000 Dr.
97,000 Dr.
APBO
Plan
Assets
40,400 Cr.
90,400 Cr.
PROBLEM 20-1
(a)
Items
CUNNINGHAM COMPANY
Pension Worksheet2010 and 2011
General Journal Entries
Annual
OCIPrior
Pension
Service Cost OCIGain/
Pension
Expense
Cash
Loss
Asset/Liability
Memo Record
Projected
Benefit
Plan
Obligation
Assets
280,000 Dr.
285,000 Dr.
280,000 Cr.
675,000 Cr.
1,083,000 Cr. 5,840,000 Cr. 4,757,000 Dr.
450,640
410,000
99,360
285,000
675,000