Answer:
1. Projected Benefit Obligation 2021 $260,000
Projected Benefit Obligation 2022 $623,000
2.Plan assets 2021 $270,000
Plan assets 2022 $577,000
3. Pension expense 2021 $260,000
Pension expense 2022 $336,000
4.Net pension asset 2021 $ 10,000
Net pension liability2022 $46,000
Explanation:
1. Computation for Projected benefit obligation
for 2021 and 2022
Projected Benefit Obligation 2021
($)
Balance, January 1, 2021 $0
Service cost $260,000
Interest cost (5% x $0) $0
Benefits paid ($0)
Balance, December 31, 2021 $260,000
Projected Benefit Obligation 2022
Balance, December 31, 2021 $260,000
Service cost $350,000
Interest cost $13,000
(5% x $260,000)
Benefits paid($0)
Balance, December 31, 2022 $623,000
2. Computation for 2021 and 2022 Plan assets
Plan assets 2021
Balance, January 1, 2021 $ 0
Actual return on plan assets (10% x $0) $0
Contributions, 2021 $$270,000
Benefits paid ($0)
Balance, December 31, 2021 $270,000
Plan assets 2022
Balance, December 31, 2021 $270,000
Actual return on plan assets $27,000
(10% x $270,000)
Contributions, 2022 $280,000
Benefits paid (0)
Balance, December 31, 2022 $577,000
3. Computation for Pension expense for 2021 and 2022
Pension expense – 2021
Service cost $260,000
Interest cost (5% x $0) $0
Expected return on the plan assets $0
(10% x $0)
Pension expense $260,000
Pension Expense – 2022
Service cost $350,000
Interest cost $13,000
(5% x $260,000)
Expected return on the plan assets($27,000)
(10% x $270,000)
Pension expense $336,000
4. Computation for Net pension asset/liability for 2021 and 2022
2021
PBO $260,000
Less Plan assets $270,000
Net pension asset, Dec. 31, 2021 $ 10,000
2022
PBO $623,000
Less Plan assets $577,000
Net pension liability, Dec. 31, 2022 $ 46,000
