P20-8 (Comprehensive 2-Year Worksheet) Glesen Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2008 and 2009.
2008 2009
- Projected benefit obligation, January 1 $650,000
- Plan assets (fair value and market related value), Jan. 1 410,000
- Prepaid/accrued pension cost (credit), January 1 80,000
- Additional pension liability, January 1 12,300
- Intangible asset-deferred pension cost, January 1 12,300
- Unrecognized prior service cost, January 1 160,000
- Service cost 40,000 $ 59,000
- Settlement rate 10% 10%
- Expected rate of return 10% 10%
- Actual return on plan assets 36,000 61,000
- Amortization of prior service cost 70,000 55,000
- Annual contributions 72,000 81,000
- Benefits paid retirees 31,500 54,000
- Increase in projected benefit obligation due to
- changes in actuarial assumptions 87,000 -0-
- Accumulated benefit obligation at December 31 721,800 789,000
- Average service life of all employees 20 years
- Vested benefit obligation at December 31 464,000
Instructions
(a) Prepare a pension worksheet presenting both years 2008 and 2009 and accompanying computations including the computation of the minimum liability (2008 and 2009) and amortization of the unrecognized loss (2009) using the corridor approach.