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Additional Pension Liability: Federal Co.

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Additional Pension Liability: Federal Co. had the following selected balances at December 31, 2008:

Projected benefit obligation $4,700,000
Accumulated benefit obligation 4,550,000
Fair value of plan assets 4,340,000
Service cost for 2008 600,000
Unrecognized prior service cost 170,000
Accrued pension cost 50,000

Instructions
(i) Calculate and clearly indicate the additional pension liability.

(ii) Prepare the journal entry to record the additional pension liability. There was no
additional pension liability balance at the beginning of the year.

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Solution Summary

A schedule leads you to the needed amount.

Solution Preview

(i)
ABO -$4,550,000
Plan asset value +$4,340,000
...

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