At the end of 2020, the balances in the accounts related to the defined benefit pension plan of the Norton Company were as follows: Projected benefit obligation 690,000 Unrecognized prior service cost (remainder to be amortized over 12 years) 37,750 Unrecognized net loss 123,000 Plan assets (at fair value) 722,625 On 1/1/21, Norton amended the plan to provide an increased amount of pension benefits; the prior service cost resulting from this amendment was $45,500. At 1/1/21, the average remaining service life of employees expected to receive benefits was 10 years. The following information relates to the year 2021: Service Cost 70,625 Settlement rate 5% Expected rate of return on plan assets 4% Plan contribution (at year-end) 103,500 Benefit payments to retirees (at year-end) 90,750 In 2021, Norton’s actual return on plan assets was $27,500. Norton follows a policy of recognizing gains/losses on a delayed basis using the "corridor approach". At the end of 2021, there was one change in the estimates and assumptions relating to computation of the projected benefit obligation, resulting in a decrease in the PBO of $29,000. Required: a. Prepare Norton’s pension worksheet, and prepare the journal entry that Norton would make to record the expense calculated. b. Which items will be reported on the financial statements for 2021 and where will they be reported? c. Prepare the pension note required for the 12/31/21 financial statements.
At the end of 2020, the balances in the accounts related to the defined benefit pension plan of the Norton Company were as follows:
Projected benefit obligation 690,000
Unrecognized prior service cost (remainder to be amortized over 12 years) 37,750
Unrecognized net loss 123,000
Plan assets (at fair value) 722,625
On 1/1/21, Norton amended the plan to provide an increased amount of pension benefits; the prior service cost resulting from this
amendment was $45,500. At 1/1/21, the average remaining service life of employees expected to receive benefits was 10 years.
The following information relates to the year 2021:
Service Cost 70,625
Settlement rate 5%
Expected
Plan contribution (at year-end) 103,500
Benefit payments to retirees (at year-end) 90,750
In 2021, Norton’s actual return on plan assets was $27,500. Norton follows a policy of recognizing gains/losses on a delayed basis
using the "corridor approach". At the end of 2021, there was one change in the estimates and assumptions relating to computation of the
projected benefit obligation, resulting in a decrease in the PBO of $29,000.
Required:
a. Prepare Norton’s pension worksheet, and prepare the
b. Which items will be reported on the financial statements for 2021 and where will they be reported?
c. Prepare the pension note required for the 12/31/21 financial statements.
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