EXERCISE 20.8 (Continued)
(c) Accumulated OCI at December 31, 2019 is €1,700; this amount is
comprised of the following:
Gain/Loss
Balance Jan. 1, 2019
€ 0
Asset loss*
Balance Dec. 31, 2019
€ 1,700 Dr.
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(a) WEBB CORP.
Pension Worksheet
General Journal Entries
Memo Record
Items
Annual
Pension
Expense
Cash
OCI—
Gain/Loss
Pension
Asset/
Liability
Defined
Benefit
Obligation
Plan Assets
EXERCISE 20.9 (20–25 minutes)
EXERCISE 20.10 (20–30 minutes)
(a) Pension expense for 2019 composed of the following:
Service cost ………………………………………………. £56,000
Interest expense
(9% X £900,000) ……………………………………… 81,000
Other comprehensive income
Asset gain (£60,000 – £54,000) ………………………… 6,000
Comprehensive income…………………………………….. £ XXXX
Statement of Financial Position
Liabilities
Partial worksheet
Bal. January 1, 2019
£ 900,000
Service cost
Interest expense
Actual return
Contribution
145,000
Bal. December 31, 2019
£805,000
£1,037,000
Equity
Accumulated OCI (G/L) Jan. 1, 2019 £40,000 (Loss)
Asset gain 6,000
Accumulated OCI (G/L) Dec. 31, 2019 £34,000 (Loss)
LO: 5, Bloom: AP, Difficulty: Moderate, Time: 20–30, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
EXERCISE 20.11 (20–30 minutes)
(a) Pension expense for 2019 composed of the following:
Service cost …………………………………………… € 77,000
Interest expense
(c) Income Statement:
Pension expense ……………………………………. € 147,000
Comprehensive Income Statement
Net income …………………………………………….. € XXXX
Other comprehensive income (loss)
Liability gain …………………………………….. 200,000
LO: 3,4,5, Bloom: AP, Difficulty: Moderate, Time: 20–30, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
EXERCISE 20.12 (35–45 minutes)
(a) Actual Return = (Ending – Beginning) – (Contributions – Benefits)
Fair value of plan assets,
(b) Computation of pension liability gains and losses and pension asset gains and losses.
1. Difference between 12/31/19 actuarially computed DBO and 12/31/19 recorded
defined benefit obligation (DBO):
DBO at end of year …………………………………. £3,300
2. Difference between actual and expected fair value of
plan assets
12/31/19 actual fair value
of plan assets …………………………………. 2,620
Expected fair value
(c) The amount recorded in other comprehensive income is the asset gain and
liability loss:
EXERCISE 20.13 (Continued)
Journal entries 12/31/19
Other Comprehensive Income (G/L) ……………….. 100
Pension Expense …………………………………………… 480
EXERCISE 20.14 (15–20 minutes)
(a) Computation of pension expense:
Service cost …………………………………………… $ 80,000
Interest expense ($700,000 X .10) ……………. 70,000
(b) Income Statement:
Pension expense ……………………………………. 82,500
Statement of Financial Position:
EXERCISE 20.15 (20–25 minutes)
(a) Below is the completed worksheet, indicating debit and credit entries.
General Journal Entries
Memo Record
Annual
Pension
Expense
Cash
OCI—Gain/
Loss
Pension
Asset/Liability
Defined
Benefit
Obligation
Plan
Assets
Balance, Jan. 1, 2019
1,100 Cr.
2,800 Cr.
1,700 Dr.
Service cost
500 Dr.
500 Cr.
Interest expense
280 Dr.
280 Cr.
Interest revenue
170 Cr.
Contributions
Benefits
200 Dr.
Asset gain
Liability loss
365 Cr.
Accumulated OCI, Dec. 31, 2018
Balance, Dec. 31, 2019
1,225 Cr.
3,745 Cr.
2,520 Dr.
(b) Pension Expense …………………………………… 610
EXERCISE 20.16 (5–10 minutes)
Postretirement benefit expense is comprised of the following:
Service cost ……………………………………………………..
P
–
45,000
EXERCISE 20.17 (25–30 minutes)
General Journal Entries
Memo Record
Annual
Postretirement
Expense
Cash
Postretirement
Asset/Liability
DPBO
Plan Assets
Balance, Jan. 1, 2019
220,000 Cr.
330,000 Cr.
110,000 Dr.
Service cost
Interest expense
Interest revenue
Contributions
10,000 Cr.
Benefits
Journal entry for 2019
10,000 Cr.
Balance, Dec. 31, 2019
272,600 Cr.
381,400 Cr.
108,800 Dr.
EXERCISE 20.18 (10–12 minutes)
Service cost …………………………………………………………. $ 83,000
Interest expense
EXERCISE 20.19 (10–12 minutes)
Service cost …………………………………………………………. € 90,000
Interest expense
EXERCISE 20.20 (15–20 minutes)
See worksheet on next page.
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ENGLEHART AG
Postretirement Benefit Worksheet—2019
General Journal Entries
Memo Record
100 Dr.
EXERCISE 20.21 (25–30 minutes)
(a) Below is the completed worksheet, indicating debit and credit entries.
General Journal Entries
Memo Record Entries
Annual
Expense
Cash
Other
Comprehensive
Income—G/L
Postretirement
Asset/Liability
DPBO
Plan
Assets
Balance, Jan. 1, 2019
290,000 Cr.
410,000 Cr.
120,000 Dr.
Service cost
56,000 Dr.
56,000 Cr.
Interest expense
36,900 Dr.
36,900 Cr.
Interest revenue
10,800 Cr.
10,800 Dr.
Contributions
66,000 Dr.
Benefits
Asset loss
Accumulated OCI, Dec. 31, 2018
18,200 Dr.
Balance, Dec. 31, 2019
27,000 Dr.
314,900 Cr.
497,900 Cr.
183,000 Dr.
(b) Postretirement Expense …………………………….. 82,100
Other Comprehensive Income (G/L) …………… 8,800
Cash …………………………………………………… 66,000
Postretirement Asset/Liability ……………… 24,900
TIME AND PURPOSE OF PROBLEMS
Problem 20.1 (Time 40–50 minutes)
Purpose—to provide a problem that requires preparation of a pension worksheet for two separate
years’ pension transactions. Included in the problem are an asset loss.
Problem 20.2 (Time 45–55 minutes)
Purpose—to provide a problem that requires preparation of a pension worksheet for three separate years’
Problem 20.3 (Time 40–50 minutes)
Purpose—to provide a problem that requires computation of the annual pension expense, preparation of
Problem 20.4 (Time 30–40 minutes)
Purpose—to provide a problem that requires computation of pension expense and preparation of the
pension journal entries.
Problem 20.5 (Time 45–55 minutes)
Problem 20.6 (Time 45–60 minutes)
Problem 20.7 (Time 35–45 minutes)
Purpose—to provide a problem that requires preparation of a worksheet.
Problem 20.8 (Time 45–60 minutes)
covering all facets of pension accounting.
Problem 20.9 (Time 40–45 minutes)
Purpose—to provide a problem that requires preparation of a worksheet for two years, journal entries,
Problem 20.10 (Time 25–30 minutes)
Problem 20.11 (Time 35–45 minutes)
Purpose—to provide a problem that requires preparation of a worksheet, journal entries, and indicates
Time and Purpose of Problems (Continued)
Problem 20.12 (Time 35–45 minutes)
Problem 20.13 (Time 30–35 minutes)
Problem 20.14 (Time 40–45 minutes)
20–37 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
SOLUTIONS TO PROBLEMS
(a)
HARRINGTON SA
Pension Worksheet––2019 and 2020
Items
General Journal Entries
Memo Record
Annual
Pension
Expense
Cash
OCI—Gain/
Loss
Pension
Asset/Liability
Defined
Benefit
Obligation
Plan
Assets
Balance, Jan. 1, 2019
300,000 Cr.
4,500,000 Cr.
4,200,000 Dr.
Service cost
150,000 Dr.
150,000 Cr.
PROBLEM 20.1
450,000 Dr.
450,000 Cr.
Interest revenue**
420,000 Cr.
Contributions
240,000 Cr.
200,000 Dr.
Journal entry for 2019
180,000 Dr.
240,000 Cr.
60,000 Dr.
Accumulated OCI, Dec. 31, 2018
240,000 Cr.
4,900,000 Cr.
4,660,000 Dr.
Additional PSC, 1/1/2020
500,000 Dr.
5,400,000 Cr.
Service cost
180,000 Dr.
180,000 Cr.
540,000 Dr.
540,000 Cr.
466,000 Cr.
Contributions
285,000 Cr.
280,000 Dr.
5,840,000 Cr.
4,925,000 Dr.
Service cost
26,000 Dr.
26,000 Cr.
Interest expense(f)
48,330 Dr.
48,330 Cr.
Interest revenue(g)
26,760 Cr.
26,760 Dr.
Contributions
48,000 Cr.
48,000 Dr.
Benefits
21,000 Dr.
21,000 Cr.
Asset loss(h)
2,760 Dr.
2,760 Cr.
Liability gain(i)
16,630 Cr.
16,630 Dr.
Journal entry for 2020
47,570 Dr.
48,000 Cr.
13,870 Cr.
14,300 Dr.
Accumulated OCI, Dec. 31, 2019
200 Dr.
Balance, Dec. 31, 2020
13,670 Cr.
201,400 Cr.
520,000 Cr.
318,600 Dr.
Expense
Gain/Loss
Obligation
Balance, Jan. 1, 2018
50,000 Cr.
250,000 Cr.
200,000 Dr.
Service cost
16,000 Dr.
16,000 Cr.
Interest expense(a)
25,000 Dr.
25,000 Cr.
Interest revenue(b)
20,000 Cr.
20,000 Dr.
Contributions
16,000 Cr.
16,000 Dr.
Benefits
14,000 Dr.
14,000 Cr.
Journal entry for 2018
21,000 Dr.
16,000 Cr.
Balance, Dec. 31, 2018
55,000 Cr.
277,000 Cr.
222,000 Dr.
Additional PSC, 1/1/2019
160,000 Dr.
160,000 Cr.
Balance, Jan. 1, 2019
437,000 Cr.
Service cost
19,000 Cr.
Interest expense(c)
43,700 Dr.
43,700 Cr.
Interest revenue(d)
22,200 Cr.
22,200 Dr.
Contributions
40,000 Cr.
40,000 Dr.
Benefits
16,400 Dr.
16,400 Cr.
Asset loss(e)
200 Cr.
Journal entry for 2019
200,500 Dr.
40,000 Cr.
160,700 Cr.
Accumulated OCI, Dec. 31, 2018
Balance, Dec. 31, 2019
215,700 Cr.
483,300 Cr.
267,600 Dr.
PROBLEM 20.2 (Continued)
Worksheet computations:
(a)$25,000 = $250,000 X 10%
(b)$200,000 X 10%
(c)$43,700 = $437,000 X 10%
(b) Journal entries:
2018
Pension Expense …………………………………………….. 21,000
Cash ………………………………………………………… 16,000
Pension Asset /Liability …………………………….. 5,000
2019
PROBLEM 20.2 (Continued)
(c) Financial Statements—2020
Income Statement
Pension expense ………………………………………. $ 47,570
Comprehensive Income Statement
Net Income …………………………..…………………… $ XXXX
Other comprehensive income (loss)