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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$5,700,000
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Fair value of plan assets
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7,200,000
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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 $350,000 are created. Other data related to the pension plan are as follows.
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2013
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2014
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Service costs
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$150,000
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$165,000
|
|
Prior service costs amortization
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$0
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$63,000
|
|
Contributions (funding) to the plan
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$168,000
|
$194,000
|
|
Benefits paid
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$190,000
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$220,000
|
|
Actual return on plan assets
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$576,000
|
$498,000
|
|
Expected rate of return on assets
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8%
|
7%
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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.