Exam 17: Pensions and Other Postretirement Benefits

The following refers to the pension spreadsheet (columns have missing amounts) for the current year for Pancho Villa Enterprises (PVE). - What was the PBO at the beginning of the year?

Interest cost is calculated by multiplying the:

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Discount rate

The projected benefit obligation may be less reliable than the accumulated benefit obligation.

Pension gains related to plan assets occur when:

On January 1, 2018,Gillock Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cost for each year of 2018 and 2019 was $600,000. The interest rate used to determine the projected benefit obligation is 10%. Both the actual and the expected return on plan assets are 8% for both years. Gillock funded the plan in the amount of $400,000 each January 1, beginning on January 1, 2018. -In the income statement, companies report the service cost component of pension expense:

The following is an incomplete pension spreadsheet for the current year for Sparky Corporation. Required: 1) Complete the pension spreadsheet. 2) Prepare the journal entries to record pension expense and funding of plan assets for the year. 3) Prepare the journal entry/ies to record any gains or losses for the year.

What are the possible components of pension expense? Which of these elements would exist in every defined benefit plan?When would the remaining elements arise?

Rodeo Corporation amended its defined benefit pension plan on January 31, 2018, to increase retirement benefits earned with each service year. The actuary estimated the prior service cost to be $216,000. Rodeo's 80 present employees are expected to retire at the rate of about 10 each year at the end of each of the next eight years beginning on December 31, 2018. Required: Using the service method, calculate the amount of prior service cost to be amortized to pension expense in each of the next eight years.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Loss-other comprehensive income

Hall of Fame Co. has a defined benefit pension plan. Two alternative possibilities for pension-related data for the current calendar year are shown below: Required: 1) For each independent case, calculate amortization of the net loss or gain that should be included as a component of pension expense for the current year. 2) Determine the net loss or gain as of December 31 of the current year.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Interest cost

The following information is related to the defined benefit pension plan of Simpson Company for the year: -Assuming no other relevant data exist, what is the pension expense for the year?

Travis Transportation reported a net loss-AOCI in last year's balance sheet. This year, the company revised its estimate of future salary levels causing its PBO estimate to decline by $12. Also, the $24 million actual return on plan assets was less than the $27 million expected return. Required: 1) Prepare the appropriate journal entries to record the gain and loss. 2) How do this gain and loss affect Travis' income statement, statement of comprehensive income, and balance sheet?

Compared to the ABO, the PBO usually is:

An overfunded pension plan means that the:

Dharma Initiative, Inc., has a defined benefit pension plan. Characteristics of the plan during 2018 are as follows: The expected long-term rate of return on plan assets was 8%. There were no AOCI balances related to pensions on January 1, 2018, but at the end of 2018, the company amended the pension formula creating a prior service cost of $24 million. Dharma Initiative prepares its financial statements according to International Financial Reporting Standards (IFRS). Required: 1. Calculate the pension expense for 2018. 2. Prepare the journal entry to record pension expense, gains or losses, past service cost, funding, and payment of benefits for 2018. 3. What amount will Dharma Initiative report in its 2018 balance sheet as a net pension asset or net pension liability?

Actuary and trustee reports indicate the following changes in the PBO and plan assets of Reeves Uniforms during 2018: Required: 1. Determine Reeves' pension expense for 2018 and prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets. 2. Determine the new gains and/or losses in 2018 and prepare the appropriate journal entry to record them. 3. Prepare a pension spreadsheet to assist you in determining end of 2018 balances in the PBO, plan assets, prior service cost, the net loss-AOCI, and the pension liability-AOCI.

The following information pertains to Havana Corporation's defined benefit pension plan: $\begin{array}{lrr}\$ 111000 \mathrm{~s})&2018 & 2019 \\&\text { Beginning } & \text { Beginning } \\&\text { Beginning } & \text { Beginning } \\\text { Projected benefit obligation } & \$(6,000) & \$(6,504) \\\text { Plan assets } & 5,760 & 6,336 \\\text { Prior service cost-AOCI } & 600 & 552\\\text { Net loss-AOCI }&720,786\end{array}$ At the end of 2018, Havana contributed $696 thousand to the pension fund and benefit payments of $624 thousand were made to retirees. The expected rate of return on plan assets was 10%, and the actuary's discount rate is 8%. There were no changes in actuarial estimates and assumptions regarding the PBO. -What is the 2018 pension expense for Havana's plan?

Pension data for the Ben Franklin Company include the following for the current calendar year: Discount rate, 8% Expected return on plan assets, 10% Actual return on plan assets, 9% Service cost, $200,000 January 1: PBO \ 1,400,000 1,000,000 Plan assets 1,500,000 Amortization of prior service cost 20,000 Amortization of net gain 4,000 December 31: Cash contributions to pension fund \ 220,000 Benefit payments to retirees 240,000 Required: 1) Determine pension expense for the year. 2) Prepare the journal entries to record pension expense and funding for the year.