Question

Harrison Forklift's pension expense includes a service cost of $17 million. Harrison began the year with a pension liability of $42 million (underfunded pension plan). 1. Interest cost, $13; expected return on assets, $11; amortization of net loss, $3. 2. Interest cost, $13; expected return on assets, $10; amortization of net gain, $3. 3. Interest cost, $13; expected return on assets, $10; amortization of net loss, $3; amortization of prior service cost, $4 million. Required: Prepare the appropriate general journal entries to record Harrison’s pension expense in each of the following independent situations regarding the other components of pension expense ($ in millions): (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Answer:

Journal Entries:

Explanation:

Event 1   Pension expense A/C Dr.   $22

             Plan assets A/C Dr. $11

                To PBO A/C                                   $30

                 To Amortization of net loss-OCI A/C   $3

Event 2   Pension expense A/C Dr.$17

             Plan assets A/C Dr. $ 10

            Amortization of net gain- OCI A/C Dr. $3

                To PBO A/C                                                      $30

Event 3   Pension expense A/C Dr.$27

             Plan assets A/C Dr. $10

                To PBO A/C                                                  $30

                 To Amortization of net loss-OCI A/C                $3

                  To Amortization of prior service cost-OCI A/C   $4

1. PBO ($17 service cost + $13 interest cost) = 30

2. PBO ($17 service cost + $13 interest cost) = 30

3. PBO ($17 service cost + $13 interest cost) = 30

The amortization amounts are reported as other comprehensive income in the statement of comprehensive income.