15 Feb Xavier Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2019, the following balances relate to this plan. Plan assets 3,288,000 Projected benefit o
Problem III: Xavier Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2019, the following balances relate to this plan.
Plan assets 3,288,000
Projected benefit obligation 3,520,000
Prior service cost (OCI) 650,000
Accumulated OCI – Loss 420,000
As a result of the operation of the plan during 2019, the following additional data are provided by the actuary.
Service cost for 2019 500,000
Settlement & expected return rate 7%
Actual return on plan assets 265,000
Average service life of all covered employees in years 20
PBO on Dec. 31, 2019, based on actuarial predictions 3,800,000
Contributions in 2019 652,000
Benefits paid retirees in 2019 555,000
INSTRUCTIONS:
(a) Using the data above, compute pension expense for the year 2019 by preparing a pension worksheet
(b) Prepare the journal entry for pension expense for 2019.
(c) Compute the net gains or losses to be amortized for 2019.
(d) Prepare the journal entry for pension expense for 2019 assuming that the prior service cost was amended on 1/1/2019 for an additional $300,000.
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