Enter the appropriate amounts/formulas in the blue-shaded cells. For the purposes of this work sheet, positive amounts are debits and negative amounts are credits.
Pension Work Sheet for 2013
Financial Statement Accounts Detailed Accounts
Pension Asset/Liability AOCI
Prepaid/ Accumulated Fair Deferred
Net Accrued Other Projected Value of Pension
Pension Pension Comprehensive Benefit Pension (Gain)/
Expense Cash Cost Income Obligation Items Loss
Balance, January 1, 2013
(a) Service cost
(b) Interest cost
(c) Actual return on assets
(d) Benefits paid
(e) Deferred gain
(f) Pension contribution
Balance, December 31, 2013
See your spreadsheet attached.
The hardest part of this spreadsheet Is how to handle the difference between actual gain on assets, which makes the assets higher, and the expected gain on assets, which reduces the pension expense. The difference goes to a holding place in equity (other comprehensive income) and may offset future differences between actual and expected. Over time these generally "wash out" and offset. If not, and they grow large, they are amortized into pension expense (have to be bigger than 10% of the bigger of pension assets or pension obligations).
Your tutorial completes the worksheet (with all cells coded as correct) and gives you some notes about the two hardest parts. Then there is a discussion (280 words) about why pensions are a big issue in the US but not elsewhere.