Components of Pension Expense
Response to the following problem:
The Nelson Company has a defined benefit pension plan for its employees. At the end of 2010 and 2011, the following information is available in regard to this pension plan:
|
|
2010
|
2011
|
|
Expected return on plan assets
|
$ 27,000
|
$ 28,000
|
|
Amortization of net gain
|
3,000
|
-
|
|
Amortization of net loss
|
|
4,000
|
|
Amortization of prior service cost
|
7,000
|
6,000
|
|
Company contribution (funded 12/31)
|
220,000
|
248,000
|
|
Interest cost on projected benefit obligation
|
42,000
|
45,000
|
|
Service cost
|
211,000
|
217,000
|
Required
1. Compute the amount of Nelson Company's pension expense in 2010 and 2011.
2. Based on the available information, prepare all the journal entries related to Nelson Company's pension plan for 2010 and 2011.
3. If the prior service cost was vested, explain how Nelson company's pension expense for 2010 would be different under IFRS.