Problem - Llano, Inc. started a pension plan on January 1, 2014. At that date, prior to service cost was granted to employees. The following information was available about the plans for 2014 and 2015.
|
|
2014
|
2015
|
|
Service Cost
|
$100,000
|
$110,000
|
|
Employer contributions at end of year
|
120,000
|
123,000
|
|
Discount rate
|
5%
|
5%
|
|
Expected annual return on plan asset
|
8%
|
8%
|
|
Prior service cost granted on January 1, 2014
|
220,000
|
0
|
|
Average remaining service life
|
10 years
|
10 years
|
Required:
a) Compute the pension expense for 2014 and 2015.
b) Prepare appropriate journal entries for 2014 only.
c) Determine the Projected Benefit Obligation (PBO), the fair value of plan assets, and the funded status of the plan at December 31, 2014.