E20-13B (Continued)
Corridor and Minimum Loss Amortization
Year
Projected
Benefit
Obligation
Plan Asset
Value
10%
Corridor
Cumulative
Unrecognized
Net Loss
Minimum
Amortization
of Loss
2014
$860
$600
$86
$ 50
$ 0
SHILOH ACRES
Pension Worksheet—2014
General Journal Entries Memo Record Entries
Items
Annual
Pension
Expense
Cash
OCI
(PSC)
OCI
(G/L)
Pension
Asset/Liability
Projected
Benefit
Obligation
Plan
Assets
Balance, Jan. 1, 2014
260 Cr.
860 Cr.
600 Dr.
(a) Service cost
100 Dr.
100 Cr.
(b) Interest cost
86 Dr.
86 Cr.
(c) Return on assets
60 Cr.
50 Cr.
110 Dr.
20–14 Copyright © 2014 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 14/e, Exercise B Solutions (For Instructor Use Only)
(d) Amortization of PSC
21 Dr.
(e) Funding
(f) Benefits
50 Dr.
(g) Liability change (increase)
Accumulated OCI, Dec. 31, 2013
0
E20-14B (Continued)
Journal entries 12/31/14
Pension Asset/Liability …………………………………………….. 4
Pension Expense ……………………………………………….. 147
E20-15B (15–20 minutes)
(a) Computation of pension expense:
Service cost ……………………………………………………………… $165,000
(b) Income Statement
Pension expense……………………………………………………… $270,000
E20-16B (25–35 minutes)
The excess of the cumulative net gain or loss over the corridor amount is
amortized by dividing the excess by the average remaining service period of
employees. The average remaining service period is computed as follows:
Average remaining service life per employee = 3,500/250 = 14
Amortization of Unrecognized Net (Gain) or Loss
Year
Projected
Benefit
Obligation (a)
Plan Assets (a)
Corridor (b)
Accumulated
OCI (G/L)
Minimum
Amortization
of (Gain) Loss
2014
$4,000,000
$3,400,000
$400,000
$ 0
$ 0
2015
4,500,000
3,640,000
450,000
(660,000)
(15,000) (c)
E20-17B (30–40 minutes)
(a)
(b) The excess of the accumulated OCI (G/L) over the corridor amount is
amortized by dividing the excess by the average remaining service life per
employee. The average service life is 7 years.
Amortization of Net (Gain) or Loss
Year
Projected
Benefit
Obligation (a)
Plan Assets (a)
10%
Corridor (b)
Accumulated
OCI (G/L)
Minimum
Amortization
of (Gain) Loss
2014
$1,650,000
$1,350,000
$165,000
$ 0
$ –0–
2015
2,150,000
1,900,000
215,000
150,000
–0– (c)
(c) Pension expense for 2014 was composed of the following:
Service cost …………………………………………………………… $175,000
E20-17B (Continued)
Pension expense for 2015 was composed of the following:
Service cost …………………………………………………………. $ 220,000
E20-18B (20–25 minutes)
(a) Below is the completed worksheet, indicating debit and credit entries.
General Journal Entries
Memo Record
Annual
Pension
Expense
Cash
OCI—Prior
Service
Cost
OCI—Gain/
Loss
Pension
Asset/Liability
Projected
Benefit
Obligation
Plan
Assets
Balance, Jan. 1, 2014
800 Cr.
4,000 Cr.
3,200 Dr.
Service cost
760 Dr.
760 Cr.
Interest cost
400 Dr.
400 Cr.
Actual return
Unexpected loss
150 Cr.
Amortization of PSC
Contributions
Benefits
300 Dr.
Liability decrease
500 Dr.
Accumulated OCI, Dec. 31, 2013
0
Balance, Dec. 31, 2014
4,360 Cr.
3,610 Dr.
(b) Pension Expense ………………………………….. 1,080
Other Comprehensive Income (G/L) ………. 50
E20-18B (Continued)
(c) Poe records no amortization of gain or loss in 2014, because there were no
gains or losses at the beginning of the year. For 2015, the corridor is $436
(10% of the PBO). Since the balance of the Other Comprehensive Income
*E20-20B (15–20 minutes)
FAMILY FAVORS INC.
Postretirement Benefits Worksheet—2014
General Journal Entries
Memo Record
Items
Annual
Post-
retirement
Expense
Cash
OCI—Prior
Service
Cost
Post-
retirement
Asset/
Liability
Accumulated
Postretirement
Benefit
Obligation
Plan
Assets
Balance, January 1, 2014
1,280,000 Cr.
1,545,000 Cr.
265,000 Dr.
(a) Service cost
134,000 Dr.
134,000 Cr.
20–20 Copyright © 2014 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 14/e, Exercise B Solutions (For Instructor Use Only)
*92,700 Dr.
(c) Actual return
(e) Benefits
120,000 Dr.
324,700 Dr.
1,434,700 Cr.
1,703,700 Cr.
269,000 Dr.
*E20-21B (10–12 minutes)
Service cost ……………………………………………………………………..
$121,000
*E20-22B (10–12 minutes)
Service cost …………………………………………………………………. $ 131,000
Interest on accumulated postretirement
MIAMI CO.
Postretirement Benefit Worksheet—2014
General Journal Entries
Memo Record
Items
Annual
Postretirement
Expense
Cash
OCI—Prior
Service Cost
Postretirement
Asset/Liability
APBO
Plan
Assets
Balance, Jan. 1, 2014
324,000 Cr.
605,000 Cr.
281,000 Dr.
Service cost
131,000 Dr.
131,000 Cr.
*E20-23B (15–20 minutes)
20–22 Copyright © 2014 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 14/e, Exercise B Solutions (For Instructor Use Only)
Interest cost
*48,400 Dr.
Actual return
60,000 Cr.
Amortization of PSC
Journal entry for 2014
184,400 Dr.
60,000 Cr.
Accumulated OCI, Dec. 31, 2013
722,400 Cr.
295,000 Dr.
*E20-24B (25–30 minutes)
(a) Below is the completed worksheet, indicating debit and credit entries.
Annual
Expense
Cash
Other
Comprehensive
Income—PSC
Postretirement
Asset/Liability
APBO
Plan
Assets
Balance, Jan. 1, 2014
600,000 Cr.
800,000 Cr.
200,000 Dr.
Service cost
110,000 Cr.
Interest cost
Actual/Expected return
Contributions
Benefits
Amortization of PSC
Accumulated OCI, Dec. 31, 2013
Balance, Dec. 31, 2014
952,000 Cr.
230,000 Dr.
(b) Pension Expense …………………………..…………… 175,000
Cash …………………………………………………… 42,000
Other Comprehensive Income (PSC) …….. 11,000