The interest settlement rate applicable to the plan is 10

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Reference no: EM13582004

Hobbs Co. has the following defined benefit pension plan balances on January 1, 2012.

Projected benefit obligation	$4,600,000
Fair value of plan assets	4,600,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2013, the company amends its pension agreement so that prior service costs of $600,000 are created. Other data related to the pension plan are:

	2012	2013
Service cost	$150,000	$170,000
Prior service cost amortization	-0-???	90,000
Contributions (funding) to the plan	200,000	184,658
Benefits paid	220,000	280,000
Actual return on plan assets	252,000	350,000
Expected rate of return on assets	6%	8%

Instructions

(a)	Prepare a pension worksheet for the pension plan in 2012.

(b)	Prepare any journal entries related to the pension plan that would be needed at December 31, 2012.

(c)	Prepare a pension worksheet for 2013 and any journal entries related to the pension plan as of December 31, 2013.

(d)	Indicate the pension-related amounts reported in the 2013 financial statements.

Reference no: EM13582004

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