Define the effects of pension plan amendments

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Question: Accounting, Analysis, and Principles PENCOMP's balance sheet at December 31, 2014, is as follows.

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Accounting: Prepare an income statement for 2015 and a balance sheet as of December 31, 2015. Also, prepare the pension expense journal entry for the year ended December 31, 2015. Round to the nearest tenth (e.g., round 2.87 to 2.9).

Analysis: Compute return on equity for PENCOMP for 2015 (assume stockholders' equity is equal to year-end average stockholders' equity). Do you think an argument can be made for including some or even all of the change in accumulated other comprehensive income (due to pensions) in the numerator of return on equity? Illustrate that calculation.

Principles: Explain a rationale for why the FASB has (so far) decided to exclude from the current period income statement the effects of pension plan amendments and gains and losses due to changes in actuarial assumptions.

Reference no: EM131593504

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