Robert Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2014, the following balances related to this plan: As a result of the operation of the plan during 2014, the actuary provided the following additional data at December 31, 2014: Instructions: (a) Compute pension expense for Robert Corp. for the year 2014 by preparing a pension worksheet that shows the journal entry for pension expense. (b) Indicate the pension amounts reported in the financial statements.Plan assets (market related value$170,000Projected benefit obligation$340,000Pension asset/liability$170,000 cr.Prior service cost$100,000OCI-Loss$39,000 Solution Interest cost = Beginning PBO × Interest rate = $340,000 × 7% = $23,800 Service cost = $45,000 Expected returns on pension fund = Beginning plan assets × Expected rate = $170,000 × 8% = $13,600 Net pension expense = Interest cost + Service cost – Expected returns on pension fund = $23,800 + $45,000 - $13,600 = $55,200 a. Journal Date Account titles P.ref Debit Credit 31/12/14 Pension expense $55,200 Pension related asset/liability $55,200 To record 2014 pension expense b. Pension expense $55,200 should be reported in the income statement of 31/12/2014. Balance sheet items would as below: Projected benefit obligation (31/12/2014) = Beginning PBO + Service cost + Interest cost – Retirement benefits paid = $340,000 + $45,000 + $23,800 - $51,000 = $357,800 Fair value (31/12/2014) = Beginning fair value + Employer contribution – Retirement benefits paid + Actual returns = $170,000 + $85,000 - $51,000 + $27,000 = $231,000 Date Account titles P.ref Debit Credit 31/12/14 Pension expense $55,200 Pension related asset/liability $55,200 To record 2014 pension expense.

1. Robert Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2014, the
following balances related to this plan:
As a result of the operation of the plan during 2014, the actuary provided the following
additional data at December 31, 2014:
Instructions:
(a) Compute pension expense for Robert Corp. for the year 2014 by preparing a pension
worksheet that shows the journal entry for pension expense.
(b) Indicate the pension amounts reported in the financial statements.Plan assets (market related
value$170,000Projected benefit obligation$340,000Pension asset/liability$170,000 cr.Prior
service cost$100,000OCI-Loss$39,000
Solution
Interest cost = Beginning PBO × Interest rate
= $340,000 × 7%
= $23,800
Service cost = $45,000
Expected returns on pension fund = Beginning plan assets × Expected rate
= $170,000 × 8%
= $13,600
Net pension expense = Interest cost + Service cost – Expected returns on pension fund
= $23,800 + $45,000 - $13,600
= $55,200
a.
Journal
Date
Account titles
P.ref
Debit
Credit
31/12/14
Pension expense
$55,200
Pension related asset/liability
$55,200

2. To record 2014 pension expense
b.
Pension expense $55,200 should be reported in the income statement of 31/12/2014.
Balance sheet items would as below:
Projected benefit obligation (31/12/2014) = Beginning PBO + Service cost + Interest cost –
Retirement benefits paid
= $340,000 + $45,000 + $23,800 - $51,000
= $357,800
Fair value (31/12/2014) = Beginning fair value + Employer contribution – Retirement benefits
paid + Actual returns
= $170,000 + $85,000 - $51,000 + $27,000
= $231,000
Date
Account titles
P.ref
Debit
Credit
31/12/14
Pension expense
$55,200
Pension related asset/liability
$55,200
To record 2014 pension expense