King, Inc. started a pension plan on January 1, 2019. At that date, prior service cost of $1,100,000 was recognized as a result of prior service credit granted to existing employees. At December 31, 2019, the following information was available:   Service cost for 2019 $ 90,000 Fair value of plan assets 225,500 Projected benefit obligation 1,278,000 Employer contribution for 2019 (at 12/31) 225,500 Expected asset return rate 7% Discount rate 8% Average remaining service life 16 years Required: a. Compute the pension expense for 2019. b. Prepare appropriate journal entries for 2019.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter19: Accounting For Post Retirement Benefits
Section: Chapter Questions
Problem 4E
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King, Inc. started a pension plan on January 1, 2019. At that date, prior service cost of $1,100,000 was recognized as a result of prior service credit granted to existing employees. At December 31, 2019, the following information was available:

 

Service cost for 2019

$ 90,000

Fair value of plan assets

225,500

Projected benefit obligation

1,278,000

Employer contribution for 2019 (at 12/31)

225,500

Expected asset return rate

7%

Discount rate

8%

Average remaining service life

16 years

Required:

a. Compute the pension expense for 2019.

b. Prepare appropriate journal entries for 2019.

 

ANSWER:

 

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