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Chapter 20: Question 8BE (page 1162)

Hawkins Corporation has the following balances at December 31, 2017. Projected benefit obligation $2,600,000 Plan assets at fair value 2,000,000 Accumulated OCI (PSC) 1,100,000 How should these balances be reported on Hawkins’ balance sheet at December 31, 2017?

Short Answer

Expert verified

The balance sheet categorized under the type of financial statementis the type of statement prepared in every organization at the end of the financial year. It is prepared to ascertain thefinancial healthof the company.

Step by step solution

01

Calculation of pension liability.

Particulars

Amount

Projected benefit obligation

$2,600,000

Less: Fair value of plan assets

$2,000,000

Pension Liability

$600,000

02

Reporting of balance

The balance as the prior service cost will be reported under the head of stockholder’s equity as accumulated comprehensive income in the Hawkins’ balance sheet as of December 31, 2017.

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Most popular questions from this chapter

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

The following items appear on Brueggen Company’s financial statements. 1. Under the caption Assets: Pension asset/liability. 2. Under the caption Liabilities: Pension asset/liability. 3. Under the caption Stockholders’ Equity: Prior service cost as a component of Accumulated Other Comprehensive Income. 4. On the income statement: Pension expense. Instructions Explain the significance of each of the items above on corporate financial statements. (Note: All items set forth above are not necessarily to be found on the statements of a single company.)

AMR Corporation (parent company of American Airlines) reported the following (in millions). Service cost $366 Interest on P.B.O. 737 Return on plan assets 593 Amortization of prior service cost 13 Amortization of net loss 154 Compute AMR Corporation’s pension expense.

What is meant by “prior service cost”? When is prior service cost recognized as pension expense?

Describe the accounting for actuarial gains and losses.
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