8. Cheyenne Company sponsors a defined benefit plan for its 100 employees. On January 1, 2020, the company’s actuary provided the following information. Accumulated other comprehensive loss (PSC) $148,300 Pension plan assets (fair value and market-related asset value) 197,400 Accumulated benefit obligation 259,400 Projected benefit obligation 376,800 The average remaining service period for the participating employees is 10 years. All employees are expected to receive benefits under the plan. On December 31, 2020, the actuary calculated that the present value of future benefits earned for employee services rendered in the current year amounted to $49,000; the projected benefit obligation was $483,600; fair value of pension assets was $276,000; the accumulated benefit obligation amounted to $366,200. The expected return on plan assets and the discount rate on the projected benefit obligation were both 10%. The actual return on plan assets is $12,100. The company’s current year’s contribution to the pension plan amounted to $66,500. No benefits were paid during the year. (a) Determine the components of pension expense that the company would recognize in 2020. (With only one year involved, you need not prepare a worksheet.) (Enter amounts that reduce pension expense with either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).) Components of Pension Expense

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 6RE

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Cheyenne Company sponsors a defined benefit plan for its 100 employees. On January 1, 2020, the company’s actuary provided the following information.

Accumulated other comprehensive loss (PSC)		$148,300
Pension plan assets (fair value and market-related asset value)		197,400
Accumulated benefit obligation		259,400
Projected benefit obligation		376,800

The average remaining service period for the participating employees is 10 years. All employees are expected to receive benefits under the plan. On December 31, 2020, the actuary calculated that the present value of future benefits earned for employee services rendered in the current year amounted to $49,000; the projected benefit obligation was $483,600; fair value of pension assets was $276,000; the accumulated benefit obligation amounted to $366,200. The expected return on plan assets and the discount rate on the projected benefit obligation were both 10%. The actual return on plan assets is $12,100. The company’s current year’s contribution to the pension plan amounted to $66,500. No benefits were paid during the year.

(a)

Determine the components of pension expense that the company would recognize in 2020. (With only one year involved, you need not prepare a worksheet.) (Enter amounts that reduce pension expense with either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)

Components of Pension Expense
		$





		$

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PENSION EXPENSE SIGNALS AN EMPLOYERS ANNUAL COST FOR MAINTAINING AN EMPLOYEE'S PENSION PLAN.

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