PROBLEM 20.3
(a) Pension expense for 2019 comprises the following:
Service cost ………………………………………………….. £52,000
Interest on defined benefit obligation
(10% X £380,000) ………………………………………… 38,000
(c) 2019 Increase/Decrease in Gains/Losses
(1) 12/31/19 new actuarially computed
DBO £490,000
Less: Defined benefit obligation
PROBLEM 20.3 (Continued)
(2) 12/31/19 fair value of plan assets £276,000
Less: Expected fair value
1/1/19 fair value of plan
assets £200,000
(d) Financial Statements—2019
Income Statement
Pension expense ……………………………………… £ 70,000
Comprehensive Income Statement
Net Income …………………………………………………….. £ XXXX
20–43 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
PROBLEM 20.3 (Continued)
PROBLEM 20.4
(a) Computation of pension expense:
2019
2020
Service cost ………………………………………………
($60,000
$90,000
Interest revenue ($560,000* X .09) and
Pension expense ……………………………………….
Interest expense ($700,000 X .09)
(b)
2019
Pension Asset/Liability ……………………………….
(39,000
Pension Expense ……………………………………….
72,600
Other Comprehensive Income (G/L) …………….
Cash …………………………………………………….
120,000
General Journal Entries
Memo Record
Annual
Pension
OCI—
Pension
Defined
Benefit
Plan
PROBLEM 20.4 (Continued)
PROBLEM 20.5
(a) Pension expense for 2019 consisted only of the service cost component
amounting to €60,000. There was no net gain or loss, plan assets, or
defined benefit obligation as of January 1, 2019.
Pension expense for 2020 comprised the following:
Pension expense for 2021 comprised the following:
PROBLEM 20.5 (Continued)
(b) Journal Entries—2019
Pension Expense …………………………………………….. 60,000
Cash ………………………………………………………… 50,000
Pension Asset /Liability ……………………………… 10,000
Journal Entries—2020
Service cost
119,000 Dr.
119,000 Cr.
Interest expense
16,000 Dr.
16,000 Cr.
Interest revenue
6,800 Cr.
6,800 Dr.
Contributions
105,000 Cr.
105,000 Dr.
Benefits
18,500 Dr.
18,500 Cr.
Asset gain
1,700 Cr.
1,700 Dr.
Liability loss*
7,500 Dr.
7,500 Cr.
Journal entry for 2021
128,200 Dr.
105,000 Cr.
5,800 Dr.
29,000 Cr.
Accumulated OCI, Dec. 31, 2020
78,900 Dr.
Balance, Dec. 31, 2021
84,700 Dr.
144,000 Cr.
324,000 Cr.
180,000 Dr.
*€324,000 – (€200,000 + €119,000 + €16,000 – €18,500).
LO: 4, Bloom: AP, Difficulty: Complex, Time: 45-55, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
Expense
Gain/Loss
Asset/Liability
Service cost
60,000 Dr.
60,000 Cr.
Interest expense
Interest revenue
Contributions
50,000 Dr.
Journal entry for 2019
50,000 Cr.
Accumulated OCI, Dec. 31, 2018
Balance, Dec. 31, 2019
60,000 Cr.
50,000 Dr.
Service cost
85,000 Dr.
85,000 Cr.
Interest expense
6,600 Dr.
6,600 Cr.
Interest revenue
5,500 Cr.
5,500 Dr.
Contributions
60,000 Cr.
60,000 Dr.
Asset loss
Liability loss
78,400 Dr.
78,400 Cr.
Benefits
30,000 Dr.
30,000 Cr.
Journal entry for 2020
60,000 Cr.
78,900 Dr.
Accumulated OCI, Dec. 31, 2019
0
Balance, Dec. 31, 2020
78,900 Dr.
200,000 Cr.
85,000 Dr.
PROBLEM 20.6
(a) Pension expense for 2019 comprised the following:
Service cost …………………………………………………………….. $200,000
(b) Pension liability, beginning of year ……………………………. $2,000,000
Less: Pension liability, end of year ……………………………. 750,000*
Decrease in liability …………………………………………… $1,250,000
PROBLEM 20.6 (Continued)
(c) 12/31/19 Fair value of plan assets $4,100,000
Less: Expected fair value of assets
1/1/19 fair value of plan assets $3,000,000
20–51 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
PROBLEM 20.6 (Continued)
General Journal Entries
Memo Record
Annual
Defined
20–52 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
Annual
Defined
HANSON LTD.
Service cost
108,000 Cr.
Interest expense*
Benefits
Asset loss**
Accumulated OCI, Dec. 31, 2011
Balance, Dec. 31, 2012
786,000 Cr.
20–53 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
PROBLEM 20.8
LEMKE SA
Pension Worksheet—2019 and 2020
General Journal Entries
Memo Record
Items
Annual
Pension
Expense
Cash
OCI—
Gain/Loss
Pension
Asset/
Liability
Defined
Benefit
Obligation
Plan Assets
Balance, Jan. 1, 2019
190,000 Cr.
600,000 Cr.
410,000 Dr.
Service cost
40,000 Dr.
40,000 Cr.
60,000 Dr.
60,000 Cr.
41,000 Cr.
Contributions
Benefits
31,500 Dr.
Liability loss
87,000 Cr.
Journal entry for 2019
59,000 Dr.
Accumulated OCI, Dec. 31, 2018
Balance, Dec. 31, 2019
92,000 Dr.
244,000 Cr.
755,500 Cr.
Service cost
59,000 Dr.
59,000 Cr.
75,550 Dr.
75,550 Cr.
51,150 Cr.
Contributions
Benefits
54,000 Dr.
Balance, Dec. 31, 2020
82,150 Dr.
236,550 Cr.
836,050 Cr.
PROBLEM 20.8 (Continued)
Worksheet computations:
(a)R60,000 = R600,000 X 10%.
(b) 2019
Pension Expense ……………………………………………… 59,000
Other Comprehensive Income (G/L) …………………… 92,000
Cash …………………………………………………………. 97,000
PROBLEM 20.8 (Continued)
(c) Financial Statements—2020
Income Statement
Pension expense …………………………………….. R 83,400
Comprehensive Income Statement
PROBLEM 20.9
(a) See worksheet on next page.
(b) December 31, 2019
Other Comprehensive Income (G/L) ………………… 208,000
(c) See worksheet on next page. The entry is below.
December 31, 2020
Other Comprehensive Income (G/L) ………………… 133,200
(d) Financial Statements—2020
Income Statement
20-57 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
PROBLEM 20.9 (Continued)
(a) HOBBS AG
Pension Worksheet—2019 and 2020
General Journal Entries Memo Record
Items
Annual
Pension
Expense
Cash
OCI—
Gain/Loss
Pension
Asset/Liability
Defined
Benefit
Obligation
Plan
Assets
Balance, Jan. 1, 2019
4,600,000 Cr.
4,600,000 Dr.
Service cost
150,000 Dr.
150,000 Cr.
Interest expense(a)
460,000 Dr.
460,000 Cr.
Interest revenue(b)
460,000 Cr.
460,000 Dr.
Contributions
200,000 Cr.
200,000 Dr.
Benefits
220,000 Dr.
220,000 Cr.
Asset loss(c)
208,000 Cr.
Journal entry for 2019
150,000 Dr.
200,000 Cr.
Accumulated OCI Dec. 31, 2018
Balance, Dec. 31, 2019
4,832,000 Dr.
Additional PSC, 1/1/2020
600,000 Dr.
Balance, Jan. 1, 2020
Service cost
170,000 Dr.
170,000 Cr.
Interest expense(d)
559,000 Dr.
559,000 Cr.
Interest revenue(e)
483,200 Cr.
483,200 Dr.
Contributions
184,658 Cr.
184,658 Dr.
Benefits
280,000 Dr.
280,000 Cr.
Asset loss(f)
133,200 Cr.
Journal entry for 2020
845,800 Dr.
Accumulated OCI, Dec. 31, 2019
Balance, Dec. 31, 2020
5,086,658 Dr.
(c) 1. Discount Rate: $26,000 ÷ $325,000 = 8% based on interest expense or $16,400 ÷ $205,000 = 8%, based on
interest revenue.
LO: 2,4, Bloom: AP, Difficulty: Moderate, Time: 25–30, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
20–59 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
PROBLEM 20.11
KRAMER COMPANY
(a) Completed Worksheet—2020
Interest expense
Interest revenue
Benefits
Asset gain
Accumulated OCI, Dec. 31, 2019
Balance, Dec. 31, 2020
PROBLEM 20.11 (Continued)
Worksheet computations:
Asset gain: $12,080 = $32,000 – $19,920.
(b) 2020
Pension Expense ……………………………………………….. 71,040
(c) Financial Statements—2020
Income Statement
Pension expense ………………………………………….. $71,040