Melanie Vail Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2015, the following balances relate to this plan.
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Plan assets
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$480,000
|
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Projected benefit obligation
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625,000
|
|
Accumulated OCI (PSC)
|
100,000
|
As a result of the operation of the plan during 2015, the following additional data are provided by the actuary.
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Service cost for 2015
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$90,000
|
|
Settlement rate
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9%
|
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Actual return on plan assets in 2015
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57,000
|
|
Amortization of prior service cost
|
19,000
|
|
Expected return on plan assets
|
52,000
|
|
Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions
|
76,000
|
|
Contributions in 2015
|
99,000
|
|
Benefits paid retirees in 2015
|
85,000
|
Download the Excel Template linked at the bottom of this page, containing the spreadsheets you will need for this exercise.
1. Use the spreadsheet Pensions to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss.
2. Compute the same items as in (#1), assuming that the settlement rate is now 7% and the expected rate of return is 10%.
3. Prepare the journal entry using the spreadsheet Journal Entries to record pension expense in 2015. You need to prepare journal entries for only #1 above.
4. Indicate the reporting of the 2015 pension amounts in the income statement and balance sheet using the spreadsheet Pensions. You need to show financial statements' presentations for only #1 above.
Attachment:- Excel_Template.xlsx