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Amounts of Components of a Company's Pension Expense

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E20-12 (Pension Expense, Journal Entries, Statement Presentation, Minimum Liability) Desiree Griseta Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2004 in which no benefits were paid.

1. The actuarial present value of future benefits earned by employees for services rendered in 2004 amounted to $56,000.
2. The company's funding policy requires a contribution to the pension trustee amounting to $145,000 for 2004.
3. As of January 1, 2004, the company had a projected benefit obligation of $1,000,000, an accumulated benefit obligation of $800,000, and an unrecognized prior service cost of $400,000. The fair value of pension plan assets amounted to $600,000 at the beginning of the year. The market-related asset value was equal to $600,000. The actual and expected return on plan assets was $54,000. The settlement rate was 9%. No gains or losses occurred in 2004 and no benefits were paid.
4. Amortization of unrecognized prior service cost was $40,000 in 2004. Amortization of unrecognized net gain or loss was not required in 2004.

Instructions
(a) Determine the amounts of the components of pension expense that should be recognized by the company in 2004.
(b) Prepare the journal entry or entries to record pension expense and the employer's contribution to the pension trustee in 2004.
(c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year 2004. The accumulated benefit obligation on December 31, 2004, was $830,000.

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E20-12 (Pension Expense, Journal Entries, Statement Presentation, Minimum Liability) Desiree Griseta Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2004 in which no benefits were paid.

1. The actuarial present value of future benefits earned by employees for services rendered in 2004 amounted to $56,000.
2. The company's funding policy requires a contribution to the pension trustee amounting to $145,000 for 2004.
3. As of January 1, 2004, the company had a projected benefit obligation of $1,000,000, an accumulated benefit obligation of $800,000, and an ...

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