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    Accounting Problem - Pension Plan Worksheet

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    P20-1

    (2 year reconciliation schedule) On January 1, 2008, Diana Peter Company has the following defined benefit pension plan balances.

    Projected benefit obligation $4,200,000
    Fair Value of plan assets 4,200,000

    The interest (Settlement) rate applicable to the plan is 10% . On January 1, 2009, the company amends its pension agreement so that prior service cost of $500,000 are created. Other data related to the pension plan are as follows.

    2008 2009

    Service Cost $150,000 $180,000

    Unrecognized prior service costs
    Amortization -0- -0-

    Contribution (funding) to the plan 140,000 185,000

    Benefit Paid 200,000 280,000

    Actual Return on plan assets 252,000 260,000

    Expected rate of return on assets 6% 8%

    Instructions:

    (a) Prepare a pension worksheet for the pension plan for 2008 and 2009
    (b) As of December 31, 2009, Prepare a schedule reconciling the funded status with the reported liability (accrued pension cost).

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    Solution Summary

    The solution examines pension plan worksheets

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