Reference no: EM132652150
Question - Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The remaining amortization period at December 31, 2016, for prior service cost is 5 years. The average remaining service life of employees is 11 years at January 1, 2017, and 10 years at December 31, 2017. The AOCI-net actuarial (gain) loss was zero at December 31, 2016. Turner smooths recognition of its gains and losses when computing its market-related value to compute expected return.
Additional Information:
December 31, Description 2017 2016
PBO $1,450,000 $1,377,000
ABO 1,425,000 1,350,000
Fair value of plan assets 1,395,000 1,085,000
Market-related value of plan assets (smoothed recognition) 1,369,000 1,085,000
AOCI-prior service cost ? 292,000
Balance sheet pension asset (liability) ? (292,000)
Service cost 117,400
Contribution 169,000
PBO actuarial gain 113,250
Benefit payments made None None
Discount rate 5% 5%
Expected rate of return 7% 7%
Required -
1. Compute the amount of prior service cost that would be amortized as a component of pension expense for 2017 and 2018.
2. Compute the actual return on plan assets for 2017.
3. Compute the unexpected net gain or loss on plan assets for 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 (gain) loss 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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