Question - On January 1, 2013, Laura's Living Company has the following defined benefit pension plan balances.
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Projected benefit obligation
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$6,400,000
|
|
Fair value of plan assets
|
6,900,000
|
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2014, the company amends its pension agreement so that service costs of $335,000 are created. Other data related to the pension plan are as follows.
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2013
|
2014
|
|
Service costs
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$180,000
|
$190,000
|
|
Prior service costs amortization
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$0
|
$86,000
|
|
Contributions (funding) to the plan
|
$200,000
|
$206,000
|
|
Benefits paid
|
$185,000
|
$215,000
|
|
Actual return on plan assets
|
$621,000
|
$654,000
|
|
Expected rate of return on assets
|
9%
|
10%
|
Required:
(a) Prepare a pension worksheet for the pension plan for 2013 and 2014.
(b) For 2014, prepare the journal entry to record pension-related amounts.