Gretta's Emporium Corp. provides its employees with a defined benefit pension plan. The plan assets and liabilities are shown below: December 31, 20X6 December 31, 20X5 $1,371,000 $1,288,000 $1,595,000 $1,487,000 Assets – market value Liabilities – actuarial value The discount rate used in the actuarial assumptions is 3%. The plan actuary advised that the current service cost for the year was $187,200. This service cost is accrued at year end. In 20X6, the pension plan made payments totalling $50,000 to retirees. The payments were made evenly throughout the year. • A plan improvement was made at the beginning of 20X6. The improvements were backdated for all members of the plan. The actuary estimated the cost at $18,000. Gretta's Emporium Corp. did not make a payment to fund the plan improvements. On July 1, 20X6, Gretta's Emporium Corp. made a contribution of $34,000 to the defined benefit plan. On December 31, 20X6, Gretta's Emporium Corp. sold one of its subsidiaries, and as a result, a group of employees was removed from the defined benefit plan. The actuary estimated that this change reduced the total defined benefit obligation by $400,000. As compensation, at the date of transfer, the pension plan trustee transferred $250,000 of the existing plan assets to the employees' new plan.
Gretta's Emporium Corp. provides its employees with a defined benefit pension plan. The plan assets and liabilities are shown below: December 31, 20X6 December 31, 20X5 $1,371,000 $1,288,000 $1,595,000 $1,487,000 Assets – market value Liabilities – actuarial value The discount rate used in the actuarial assumptions is 3%. The plan actuary advised that the current service cost for the year was $187,200. This service cost is accrued at year end. In 20X6, the pension plan made payments totalling $50,000 to retirees. The payments were made evenly throughout the year. • A plan improvement was made at the beginning of 20X6. The improvements were backdated for all members of the plan. The actuary estimated the cost at $18,000. Gretta's Emporium Corp. did not make a payment to fund the plan improvements. On July 1, 20X6, Gretta's Emporium Corp. made a contribution of $34,000 to the defined benefit plan. On December 31, 20X6, Gretta's Emporium Corp. sold one of its subsidiaries, and as a result, a group of employees was removed from the defined benefit plan. The actuary estimated that this change reduced the total defined benefit obligation by $400,000. As compensation, at the date of transfer, the pension plan trustee transferred $250,000 of the existing plan assets to the employees' new plan.
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 6E
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Answer both subparts a and b.if answered within 45mins,it would be helpful!!!
Transcribed Image Text:Gretta's Emporium Corp. provides its employees with a defined benefit pension plan.
The plan assets and liabilities are shown below:
December 31, 20X6
December 31, 20X5
$1,371,000
$1,288,000
$1,595,000
$1,487,000
Assets – market value
Liabilities – actuarial value
The discount rate used in the actuarial assumptions is 3%.
The plan actuary advised that the current service cost for the year was $187,200.
This service cost is accrued at year end.
In 20X6, the pension plan made payments totalling $50,000 to retirees. The
payments were made evenly throughout the year.
A plan improvement was made at the beginning of 20X6. The improvements were
backdated for all members of the plan. The actuary estimated the cost at $18,000.
Gretta's Emporium Corp. did not make a payment to fund the plan improvements.
On July 1, 20X6, Gretta's Emporium Corp. made a contribution of $34,000 to the
defined benefit plan.
On December 31, 20X6, Gretta's Emporium Corp. sold one of its subsidiaries, and
as a result, a group of employees was removed from the defined benefit plan. The
actuary estimated that this change reduced the total defined benefit obligation by
$400,000. As compensation, at the date of transfer, the pension plan trustee
transferred $250,000 of the existing plan assets to the employees' new plan.
Transcribed Image Text:a) Prepare a reconciliation from the opening balances to the ending balances of the
defined benefit obligation and plan assets for the year ended December 31, 20X6.
b) Prepare summary journal entries for pension expense for the year.
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