Explore BrainMass

Pension calculation

Can you help me get started with this assignment?

Presented below is information related to major Department stores, Inc. pension plan for 2008

Accumulated benefit obligation (at year -end) $600,000
Service cost 520,000
Funding contribution for 2008 500,000
Settlement rate used in actuarial computation 10%
Expected return on plant assets 9%
Amortization of PSC (due to benefit increase) 100,000
Amortization of net gains 48,000
Projected benefit obligation (at beginning of period) 480,000
Market-related (and fair) value of plan assets (at the beginning of period)$360,000


a) Compute the amount of pension expense to be reported for 2008 (show computations)

b) Prepare the journal entry to record pension expense and the employer's contribution for 2008. Assume no new actuarial gains/losses were experienced and that actual returns on assets equaled expected return.

Solution Preview

The amount of pension expense for 2008 is
Service cost =$520,000
Add: Interest on projected benefit obligation ($480,000 × 10%)= 48,000
Less: ...

Solution Summary

The solution explains how to calculate the pension expense and pass the related journal entries