Chapter 20: E20-9 (page 1164)

Taveras Enterprises provides the following information relative to its defined benefit pension plan. Balances or Values at December 31, 2017 Projected benefit obligation $2,737,000 Accumulated benefit obligation 1,980,000 Fair value of plan assets 2,278,329 Accumulated OCI (PSC) 210,000 Accumulated OCI—Net loss (1/1/17 balance, –0–) 45,680 Pension liability 458,671 Other pension plan data for 2017: Service cost 94,000 Prior service cost amortization 42,000 Actual return on plan assets 130,000 Expected return on plan assets 175,680 Interest on January 1, 2017, projected benefi t obligation 253,000 Contributions to plan 93,329 Benefi ts paid 140,000
Instructions (a) Prepare the note disclosing the components of pension expense for the year 2017. (b) Determine the amounts of other comprehensive income and comprehensive income for 2017. Net income for 2017 is $35,000. (c) Compute the amount of accumulated other comprehensive income reported at December 31, 2017.

Short Answer

Expert verified

Comprehensive income is the summation of all organizations' revenues and expenses that need to be realized. These income amounts are not represented under the financial statement of income.

Step by step solution

( a) Computation of pension expense for 2017.

Particulars	Amount
Service cost	$94,000
Add: Interest cost	$253,000
Less: Expected return on plan assets	$175,680
Add: Prior service cost amortization	$42,000
Pension expense 2017	$213,320

(b) Computation of the amount of other comprehensive income for 2017

Particulars	Amount
Amortization of prior service cost	($42,000)
Add: Actuarial loss	$45,680
Other comprehensive loss	$3,680

(b) Computation of comprehensive income for 2017

Particulars	Amount
Net Income	$35,000
Add: Other comprehensive income	$3,680
Comprehensive Income	$31,320

(c) Computation of Accumulated other comprehensive income reported on December 31, 2017

Particulars	PSC	Gain/Loss
Balance Jan 1, 2017 $($ 210, 000 + $ 42, 000)$	$252,000 Dr.	0
Amortization of PSC unexpected loss	$42,000 Cr.	-
Balance Dec 31, 2017	$210,000 Dr.	$45,680 Dr.