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Chapter 20: Q16Q. (page 1161)

Given the following items and amounts, compute the actual return on plan assets: fair value of plan assets at the beginning of the period \(9,500,000; benefits paid during the period \)1,400,000; contributions made during the period \(1,000,000; and fair value of the plan assets at the end of the period \)10,150,000.

Short Answer

Expert verified

Actual return on plan assets denotes theperformance of assets defined under the organization's projected pension plan. It is used in a pension worksheet to determine the pension expense for a particular year.

Step by step solution

01

Computation of actual funding made

Actualfunds=Contributionstoplanduringtheperiod-Benefitspaidduringtheperiod=$1,000,000-$1,400,000=-$400,000

02

Calculation of actual return on plan assets

Actualreturnonplanassets=(Fairvalueofplanasaetattheend-fairvalueofplanassetatthebeginning)-Actualfunds=($10,150,000-$9,200,000)-(-$400,000)=$950,000+$400,000=$1,350,000

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Most popular questions from this chapter

The following information is available for the pension plan of Radcliffe Company for the year 2017. Actual and expected return on plan assets $ 15,000 Benefits paid to retirees 40,000 Contributions (funding) 90,000 Interest/discount rate 10% Prior service cost amortization 8,000 Projected benefit obligation, January 1, 2017 500,000 Service cost 60,000 Instructions (a) Compute pension expense for the year 2017. (b) Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017.

Campbell Soup Company reported pension expense of \(73 million and contributed \)71 million to the pension fund. Prepare Campbell Soup Company’s journal entry to record pension expense and funding, assuming Campbell has no OCI amounts

Question: What is meant by “past service cost”? When is past service cost recognized as pension expense?

Veldre Company provides the following information about its defined benefit pension plan for the year 2017. Service cost $ 90,000 Contribution to the plan 105,000 Prior service cost amortization 10,000 Actual and expected return on plan assets 64,000 Benefits paid 40,000 Plan assets at January 1, 2017 640,000 Projected benefi t obligation at January 1, 2017 700,000 Accumulated OCI (PSC) at January 1, 2017 150,000 Interest/discount (settlement) rate 10% Instructions Compute the pension expense for the year 2017.

The meaning of the term “fund” depends on the context in which it is used. Explain its meaning when used as a noun. Explain its meaning when it is used as a verb.
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