Glibler, Inc., on January 1, 2013, initiated a noncontributory defined benefit pension plan for its employees. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2013 was $1,760,000, prior service cost on that date was $1,260,000 and the company has set aside assets valued at $500,000 for the plan on the same date. The following information related to the plan is also available:
Employers Contribution at year end $ 500,000
Benefits paid at year end 400,000
Accumulated Benefit Obligation at year end 1,300,000
Service Cost 150,000
Prior Service Cost Amortization Period 10.5 years
Discount Rate 10%
Expected Asset Return Rate 10%
REQUIRED:
1) Compute the components of pension expense for 2013
2) Compute the Other Comprehensive Income adjustment for 2013.
3) Prepare the pension journal entries required for 2013.
4) Develop the plan status as of December 31, 2013 showing the PBO, Plan Assets, over/under funded status, unamortized prior service cost and the (accrued)/prepaid recorded on the books.