Question: (Comprehensive 2-Year Worksheet) Hobbs Co. has the following defined benefit pension plan balances on January 1, 2014.
Projected benefit obligation $4,600,000
Fair value of plan assets 4,600,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends its pension agreement so that prior service costs of $600,000 are created. Other data related to the pension plan are:
Instructions: (a) Prepare a pension worksheet for the pension plan in 2014.
(b) Prepare any journal entries related to the pension plan that would be needed at December 31, 2014.
(c) Prepare a pension worksheet for 2015 and any journal entries related to the pension plan as of December 31, 2015.
(d) Indicate the pension-related amounts reported in the 2015 financial statements.