Problem
Baron Company adopted a defined benefit pension plan on January 1, 2015. The following information pertains to the pension plan for 2016 and 2017:
|
|
2016
|
2017
|
|
Service cost
|
$150,000
|
$160,000
|
|
Projected benefit obligation (1/1)
|
112,500
|
269,250
|
|
Plan assets (1/1)
|
112,500
|
275,750
|
|
Company contribution (funded 12/31)
|
156,500
|
170,000
|
|
Discount rate
|
6%
|
6%
|
|
Expected long-term (and actual) rate of return on plan assets
|
6%
|
6%
|
There are no other components of Baron's pension expense.
Task
a) Compute the amount of Baron's pension expense for 2016 and 2017.
b) Prepare the journal entries to record the pension expense for 2016 and 2017.