question archive Problem #1: Harrison Forklift's pension expense includes a service cost of $10 million

Problem #1: Harrison Forklift's pension expense includes a service cost of $10 million

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Problem #1:

Harrison Forklift's pension expense includes a service cost of $10 million. Harrison began the year with a pension liability of $28 million (underfunded pension plan).

1.Interest cost, $6; expected return on assets, $4; amortization of net loss, $2.2.Interest cost, $6; expected return on assets, $4; amortization of net gain, $2.3.

Interest cost, $6; expected return on assets, $4; amortization of net loss, $2; amortization of prior service cost, $3 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): 

Problem #2:

Abbott and Abbott has a noncontributory, defined benefit pension plan. At December 31, 2016, Abbott and Abbott received the following information:

 ($ in millions)  Projected Benefit Obligation     Balance, January 1$120       Service cost 20       Interest cost 12       Benefits paid (9)   Balance, December 31$143    Plan Assets     Balance, January 1$80       Actual return on plan assets 9       Contributions 2016 20       Benefits paid (9)   Balance, December 31$100  

The expected long-term rate of return on plan assets was 10%. There was no prior service cost and a negligible net loss–AOCI on January 1, 2016.

Required:1.

Determine Abbott and Abbott’s pension expense for 2016.

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