Reference no: EM132023974
Question - Jack Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2010, the following balances relate to this plan.
Plant Assets - 5,516,000
Projected benefit obligation - (5,200,000)
Prior service cost (OCI) - 2,540,000
Accumulated OCI (Gain/loss) - (736,000)
As a result of the operation of the plan during 2010, the following additional data are provided by the actuary.
Service cost for 2010 - 653,000
Settlement rate - 9%
Expected rate of return - 10%
Plan asset on Dec. 31, 2010 - 6,320,000
Average service life of all covered employees in years - 20
PBO on Dec. 31 2010m based on actuarial predictions 6,135,000
Contributions in 2010 - 912,000
Benefits paid retirees in 2010 - 805,000
Instructions:
a) Using data above, compute pension expense for the year 2010 by preparing a pension worksheet.
B) Prepare journal entry for pension expense for 2010.
c) Compute the amount of net gains or losses to be amortized for 2010 and 2011.