Beruflich Dokumente
Kultur Dokumente
Determine pension
LO17-6 LO17-7
expense
LO17-6 LO17-7 Text: E 17-16
Text: E 17-10
At
$240
27
60
(27)
$300
The expected long-term rate of return on plan assets was 10%. There was no
prior service cost and a negligible net lossAOCI on January 1, 2013.
Required:
1. Determine Hunts pension expense for 2013.
2. Prepare the journal entries to record Hunts pension expense, funding, and
payment of benefits for 2013.
Determine and
record pension
expense, gains and
losses; funding and
retiree benefits
Actuary and trustee reports indicate the following changes in the PBO and
plan assets of JL Logistics during 2013:
Prior service costAOCI at Jan. 1, 2013, from plan amendment at the
beginning of 2006 (amortization: $2 million per year)
Net lossAOCI at Jan.1, 2013 (previous losses exceeded previous gains)
Average remaining service life of the active employee group
Actuarys discount rate
$14 million
$40 million
10 years
7%
Exercise 17-3
Exercise 17-4
Postretirement
benefits;
determine the
APBO and
service cost
Postretirement
benefits; determine
expense
LO17-11
Text: E 17-29
LO17-9 LO17-10
Text: BE 17-24
($ in millions)
Beginning of 2013
PBO
$300
Beginning of 2013
Service cost
40
Interest cost, 7%
21
8% (10% expected)
(7)
(19)
$335
Cash contributions
Less: Retiree benefits
End of 2013
PLAN
ASSETS
$200
16
45
(19)
$242
Required:
1. Determine JL Logistics pension expense for 2013 and prepare the
appropriate journal entries to record the expense as well as the cash
contribution to plan assets.
2. Prepare the appropriate journal entry to record any 2013 gains and losses.
3. Prepare the appropriate journal entry to record any 2013 the cash
contribution to plan assets.
4. Prepare the appropriate journal entry to record retiree benefits.
Love Industries has an unfunded postretirement health care benefit plan.
Medical care benefits are provided to employees who render 10 years service and
attain age 55 while in service. At the end of 2013, Larry Abbott is 31. He was
hired by Love at age 25 (6 years ago) and is expected to retire at age 64. The
expected postretirement benefit obligation for Abbott at the end of 2013 is
$200,000 and $216,000 at the end of 2014.
Required:
Calculate the accumulated postretirement benefit obligation at the end of 2013
and 2012 and the service cost for 2013 and 2014 as pertaining to Abbott.
Intermediate Accounting, 7e
Problem 17-1
ABO calculations;
present value
concepts
LO17-2 LO17-3
Text: P 17-1
($ in millions)
$210
none
20 years
15 years
Problem 17-2
Problem 17-3
PBO calculations;
present value
concepts
LO17-3
Service cost,
interest, and PBO
calculations;
present value
concepts
Text: P 17-2
LO17-3
Text: P 17-3
3. What is the companys accumulated benefit obligation at the end of 2013 with
respect to Flay?
4. If no estimates are changed in the meantime, what will be the accumulated
benefit obligation at the end of 2013 (two years later) when Flays salary is
$85,000?
[Problems 1 5 are variations of the same situation, designed to focus on different
elements of the pension plan.]
Intermediate Accounting, 7e
Problem 17-4
Problem 17-5
Loss on PBO;
present value
concepts
LO17-3 LO17-6
Text: P 17-5
LO17-3 LO17-6
Text: P 17-4
3. What is the companys service cost for 2013 with respect to Flay?
4. What is the companys interest cost for 2013 with respect to Flay?
5. Combine your answers to requirements 1, 3, and 4 to determine the
companys projected benefit obligation at the end of 2013 (after 15 years
service) with respect to Flay?
[Problems 1 5 are variations of the same situation, designed to focus on different
elements of the pension plan.]
Intermediate Accounting, 7e