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Question: puhlman inc provides a defined benefit pension plan to its...

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Puhlman Inc. provides a defined benefit pension plan to its employees. It smooths recognition of its gains and losses when computing its market-related value to compute expected return. Additional information follows:

December 31,
Description 2017 2016
PBO ? $ 2,500,000
ABO $ 2,335,000 2,150,000
Fair value of plan assets ? 2,100,000
Market-related value of plan assets (smoothed recognition) 2,342,800 2,100,000
Benefit payments made 272,000 231,000
AOCI—net actuarial (gain) loss 114,000 -0-
AOCI—prior service cost ? 400,000
Balance sheet pension asset (liability) ? (400,000 )
Service cost 214,000
Contribution 321,000
Actual return 129,000
Discount rate for PBO 9 % 10 %
Expected rate of return 10 % 10 %
Average remaining service life of employees 15 years 15 years

During 2017, the PBO increased by $33,000 due to a decrease in the discount rate from the previous year. The 2016 discount rate assumption was used to compute 2017 service cost and interest cost.

Required:

Round all amounts to the nearest dollar:

  1. Compute the fair value of plan assets at December 31, 2017.
  2. Compute the prior service cost that would be amortized as a component of pension expense for 2017 and 2018.
  3. Compute the PBO at December 31, 2017.
  4. Compute pension expense for 2017.
  5. Prepare the company’s required pension journal entries for 2017.
  6. Compute the 2017 increase/decrease in AOCI—net actuarial (gains) or losses and the amount to be amortized in 2017 and 2018.
  7. Confirm that the pension asset (liability) on the balance sheet equals the funded status as of December 31, 2017.
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