Reference no: EM132958985
Thorp Inc. maintains a defined benefit pension plan for its employees. Pension plan balances as at January 1, 2020 include:
Projected Benefit Obligation (PBO), January 1, 2020 $ 600,000
Plan assets at market-related value, January 1, 2020 $ 550,000
Prior service cost (PSC- OCI) $ 150,000
Average remaining service period 15 years
Service cost $ 90,000
Expected returns on plan assets 8%
Actual returns earned on plan assets $40,000
Actuarial interest rate 4%
Contributions paid $ 150,000
Benefits to retirees in 2020 $ 100,000
Loss from change in actuarial assumption, December 31, 2020 $ 46,000
These prior service costs are from 2019 and already included in PBO on January 1,2020.
Required:
Problem a. Determine the pension expenses recognized in 2020.
Problem b. Prepare the journal entries to reflect the accounting for the pension plan for 2020.
Problem c. Prepare the ending balances (31 December 2020) for plan assets, PBO, and calculate net pension liability.
Problem d. What will be the expected impact of the current pandemic (Covid-19) on PBO?
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