Response to the following problem:
Hanson Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2014, the following balances related to this plan.
|
Plan assets (market-related value)
|
$520,000
|
|
Projected benefit obligation
|
700,000
|
|
Pension asset/liability
|
180,000 Cr.
|
|
Prior service cost
|
81,000
|
|
Net gain or loss (debit)
|
91,000
|
As a result of the operation of the plan during 2014, the actuary provided the following additional data for 2014.
|
Service cost
|
$108,000
|
|
Settlement rate, 9%; expected return rate, 10%
|
|
|
Actual return on plan assets
|
48,000
|
|
Amortization of prior service cost
|
25,000
|
|
Contributions
|
133,000
|
|
Benefits paid retirees
|
85,000
|
|
Average remaining service life of active employees
|
10 years
|
Instructions
Using the preceding data, compute pension expense for Hanson Corp. for the year 2014 by preparing a pension worksheet that shows the journal entry for pension expense. Use the market-related asset value to compute the expected return and for corridor amortization.