Spruce-East Advertising, Inc., initiated a defined-benefit pension…
QuestionAnswered step-by-stepSpruce-East Advertising, Inc., initiated a defined-benefit pension…Spruce-East Advertising, Inc., initiated a defined-benefit pension plan 5 years ago. All prior service costs are for vested employees. The beginning balances for the current year related to the company’s pension plan follow:Beginning plan assets at fair value $8,010Beginning projected benefit obligation 9,133Service cost 1,827Settlement rate 8%Expected return on plan assets 4%Actual return on plan assets 570Contributions for the year 1,060Benefits paid during the year 900Amortization of prior service cost 670Beginning balance of Unamortized prior service cost (AOCI) 2,020Beginning balance of Unamortized net actuarial gains (AOCI) 3,012Average remaining service life of employees 5 years RequiredA. Compute the total pension cost for the year.B. Determine the ending balances of the plan assets and the projected benefit obligation and indicate the funded status of the plan for the year.C. Reconcile the ending balance in the accumulated other comprehensive income account with the amounts attributable to unamortized prior service cost and unamortized net actuarial gains/losses.D. Prepare the journal entry to record the current year’s pension costA Calculation of amortization of actuarial gains: Unamortized net actuarial gains Corridor (10% of beginning PBO) Difference ÷ Average remaining number of years Amortization of net actuarial gains Components of Pension Cost: Amount Service cost Interest on beginning PBO Expected return on beginning plan assets Amortization of prior service costs Amortization of cumulative unamortized gain Total Pension Cost B T-Account Analysis of the PBO: Pension Benefit Obligation Beginning balance Benefits paid to retirees Service cost Interest on beginning PBO Ending balance T-Account Analysis of the Plan Assets at Fair Value: Plan Assets at Fair Value Beginning balance Funding of the plan Benefits paid to retirees Expected return Unexpected return Ending balance Funding status at the end of the year Funding status at the beginning of the year Net over/under funding for the year C T-Account Analysis of the Accumulated OCI Account: Accumulated Other Comprehensive Income Beginning balance Amortization of gain Unexpected return on assets Amortization of PSC Ending balance Breakdown of the components of the Accumulated OCI Account: Prior Service Actuarial Cost Gains/Losses Total Beginning balance Amortization of PSC Amortization of gain Acuarial gain from unexpected return D General Journal Date Accounts Debit Credit Current Year AccountingBusinessFinancial AccountingACC 204Share Question
