Problem: Pensions.
Simson, Inc. obtained the following information from the insurance company that administers the company's employee defined benefit pension plan:
For the Year Ended December 31,
|
2004 |
2005 |
| Plan assets (at fair value) |
$2,000,000 |
$2,800,000 |
| Accumulated benefit obligation |
2,100,000 |
3,000,000 |
| Pension expense |
800,000 |
870,000 |
| Funding contribution |
880,000 |
880,000 |
| Prior service cost not yet recognized in earnings |
2,000,000 |
1,980,000 |
Instructions:
Q1. What descriptions and amounts are reported on the income statement and balance sheet related to pensions in 2004?
Q2. What descriptions and amounts are reported on the income statement and balance sheet related to pensions in 2005?
Q3. Assume that there was no unrecognized prior service cost in 2004. How would this affect the income statement and balance sheet in 2004?