James Corp.is a publicly traded enterprise that sponsors a defined benefit pension plan for its employee group.The company has a December 31st, year-end.The plan is trusteed.
The following selected information pertaining to the plan included the following: * Employer contributions and benefits paid to retirees both occurred evenly throughout the year.
** Resulting in additional benefits accruing to the employee group due to prior years of service.The company is subject to an 8% discount rate.
The Defined Benefit Obligation (DBO)had a fair value of $200,000 on December 31, Year 3.The Plan Assets had a fair value of $120,000 on December 31, Year 3.
Financial Statement excerpts as at January 1, Year 3 included the following: James Corp.adjusts its funded status to reflect the fair values of its plan assets and defined benefit obligation (DBO)at the end of each fiscal year.
Required:
Part A (15 Marks): Compute the following*:
Pension Expense for Year 3.Assume that any interest revenue or expense is included within pension expense.
The funded status of the plan as at December 31, Year 3 (State whether the plan is over or under-funded as at that date.).
AOCI balance as at December 31st, Year 3.(State whether a debit or credit balance exists).
*Show all calculations.You may wish to use a spreadsheet format.Part B (5 Marks):
State which elements to your answer above would change under ASPE, both in terms of measurement and in terms of presentation.For this part only, ignore any opening AOCI balances.Be specific.

Question

James Corp.is a publicly traded enterprise that sponsors a defined benefit pension plan for its employee group.The company has a December 31st, year-end.The plan is trusteed.
The following selected information pertaining to the plan included the following:  * Employer contributions and benefits paid to retirees both occurred evenly throughout the year.
** Resulting in additional benefits accruing to the employee group due to prior years of service.The company is subject to an 8% discount rate.
The Defined Benefit Obligation (DBO)had a fair value of $200,000 on December 31, Year 3.The Plan Assets had a fair value of $120,000 on December 31, Year 3.
Financial Statement excerpts as at January 1, Year 3 included the following:  James Corp.adjusts its funded status to reflect the fair values of its plan assets and defined benefit obligation (DBO)at the end of each fiscal year.
Required:
Part A (15 Marks): Compute the following*:
Pension Expense for Year 3.Assume that any interest revenue or expense is included within pension expense.
The funded status of the plan as at December 31, Year 3 (State whether the plan is over or under-funded as at that date.).
AOCI balance as at December 31st, Year 3.(State whether a debit or credit balance exists).
*Show all calculations.You may wish to use a spreadsheet format.Part B (5 Marks):
State which elements to your answer above would change under ASPE, both in terms of measurement and in terms of presentation.For this part only, ignore any opening AOCI balances.Be specific.

Quizplus · Accepted Answer

The Answer of James Corp.is a publicly traded enterprise that sponsors a defined benefit pension plan for its employee group.The company has a December 31st, year-end.The plan is trusteed.
The following selected information pertaining to the plan included the following:  * Employer contributions and benefits paid to retirees both occurred evenly throughout the year.
** Resulting in additional benefits accruing to the employee group due to prior years of service.The company is subject to an 8% discount rate.
The Defined Benefit Obligation (DBO)had a fair value of $200,000 on December 31, Year 3.The Plan Assets had a fair value of $120,000 on December 31, Year 3.
Financial Statement excerpts as at January 1, Year 3 included the following:  James Corp.adjusts its funded status to reflect the fair values of its plan assets and defined benefit obligation (DBO)at the end of each fiscal year.
Required:
Part A (15 Marks): Compute the following*:
Pension Expense for Year 3.Assume that any interest revenue or expense is included within pension expense.
The funded status of the plan as at December 31, Year 3 (State whether the plan is over or under-funded as at that date.).
AOCI balance as at December 31st, Year 3.(State whether a debit or credit balance exists).
*Show all calculations.You may wish to use a spreadsheet format.Part B (5 Marks):
State which elements to your answer above would change under ASPE, both in terms of measurement and in terms of presentation.For this part only, ignore any opening AOCI balances.Be specific.