Puhlman Inc. provides a defined benefit pension plan to its employees. It smooths recognition of its gains andlosses when computing its market-related value to compute expected return. Additional information follows:December 31,Description20X120X0? $2,500,0002,150,0002,100,000PBOАВО$2,335,000Fair value of plan assetsMarket-related value of plan assets (smoothedrecognition)Benefit payments madeAOCI-net actuarial (gain) lossAOCI-prior service costBalance sheet pension asset (liability)2,342,800272,000114,0002,100,000231,000-0-400,000(400,000)214,000321,000129,000Service costContributionActual returnDiscount rate for PBO9%10%Expected rate of returnAverage remaining service life of employees10%10%15 years15 yearsDuring 20X1, the PBO increased by $33,000 due to a decrease in the discount rate from the previous year. The20X0 discount rate assumption was used to compute 20X1 service cost and interest cost.Required:1. Compute the fair value of plan assets at December 31, 20X1.2. Compute the prior service cost that would be amortized as a component of pension expense for 20X1 and 20X2.3. Compute the PBO at December 31, 20X1.4. Compute pension expense for 20X1.5. Prepare the company's required pension journal entries for 20X1.6. Compute the 20X1 increase/decrease in AOCI-net actuarial (gains) or losses and the amount to be amortized in20X1 and 20X2.7. Confirm that the pension asset (liability) on the balance sheet equals the funded status as of December 31, 20X1.

As per defined benefit pension plan, employer promises to their employees to pay regular sum after…

Puhlman Inc. provides a defined benefit pension plan to its employees. It smooths recognition of its gains a losses when computing its market-related value to compute expected return. Additional information follows December 31, Description 20X1 20X0 ? $2,500,000 2,150,000 2,100,000 PBO АВО $2,335,000 Fair value of plan assets Market-related value of plan assets (smoothed recognition) Benefit payments made AOCI-net actuarial (gain) loss AOCI-prior service cost Balance sheet pension asset (liability) 2,342,800 272,000 2,100,000 231,000 114,000 -0- ? 400,000 (400,000) Service cost 214,000 321,000 129,000 9% Contribution Actual return Discount rate for PB0 10% Expected rate of return Average remaining service life of employees 10% 10% 15 years 15 years

Puhlman Inc. provides a defined benefit pension plan to its employees. It smooths recognition of its gains a losses when computing its market-related value to compute expected return. Additional information follows December 31, Description 20X1 20X0 ? $2,500,000 2,150,000 2,100,000 PBO АВО $2,335,000 Fair value of plan assets Market-related value of plan assets (smoothed recognition) Benefit payments made AOCI-net actuarial (gain) loss AOCI-prior service cost Balance sheet pension asset (liability) 2,342,800 272,000 2,100,000 231,000 114,000 -0- ? 400,000 (400,000) Service cost 214,000 321,000 129,000 9% Contribution Actual return Discount rate for PB0 10% Expected rate of return Average remaining service life of employees 10% 10% 15 years 15 years

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 12QE

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