E 20-19 (Postretirement Benefit Expense Computation)
Kreter Co. provides the following information about its postretirement benefit plan for the year 2014.
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Service cost
|
$45,000
|
|
Contribution to the plan
|
10,000
|
|
Actual and expected return on plan assets
|
11,000
|
|
Benefits paid
|
20,000
|
|
Plan assets at January 1, 2014
|
110,000
|
|
Accumulated postretirement benefi t obligation at January 1, 2014
|
330,000
|
|
Discount rate
|
8%
|
Instructions
Compute the postretirement benefit expense for 2014.
P20-8 (Comprehensive 2-Year Worksheet) Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2014 and 2015.
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2014
|
2015
|
|
Projected benefit obligation, January 1
|
$600,000
|
|
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Plan assets (fair value and market-related value), January 1
|
410,000
|
|
|
Pension asset/liability, January 1
|
190,000 Cr.
|
|
|
Prior service cost, January 1
|
160,000
|
|
|
Service cost
|
40,000
|
$59,000
|
|
Settlement rate
|
10%
|
10%
|
|
Expected rate of return
|
10%
|
10%
|
|
Actual return on plan assets
|
36,000
|
61,000
|
|
Amortization of prior service cost
|
70,000
|
50,000
|
|
Annual contributions
|
97,000
|
81,000
|
|
Benefits paid retirees
|
31,500 54,000
|
|
|
Increase in projected benefit obligation due to
|
|
|
|
changes in actuarial assumptions
|
87,000
|
-0-
|
|
Accumulated benefit obligation at December 31
|
721,800
|
789,000
|
|
Average service life of all employees
|
|
20 years
|
|
Vested benefit obligation at December 31
|
|
464,000
|
Instructions
(a) Prepare a pension worksheet presenting both years 2014 and 2015 and accompanying computations and amortization of the loss (2015) using the corridor approach.
(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year.
(c) For 2015, indicate the pension amounts reported in the financial statements.