(7) Pensions and Equity

Question 1

Net periodic pension const formula:

Answer 1

SIRAGE:
Service const (current)
\+ Interst cost
- Return on plan assets
\+ Amortization of prior service cost
- Gains and losses
\+ Existing amortization of net obligation or net asset
= Net periodic pension cost

Question 2

How to classify a pension plan (either Current of long term asset or liability)

Answer 2

By comparing the FV of the plan assets to the PBO

Question 3

Whats the classification of the plan asset if your over funded?

Answer 3

Its always categorized as a non-current asset

Question 4

whats the journal entry to contribute to a plan asset

Answer 4

DR: Pension benefit asset
CR: Cash

Question 5

Service cost Journal entry for plan asset

Answer 5

Dr: Pension expense
Cr: Pension benefit assets

Question 6

How to calc ending FV of plan assets

Answer 6

Beg FV of plan assets
+Contributions to the plan
-Benefits paid
+Return on Plan Asset (Beg FV of plan asset * actual or expected rate of return [whichever the instructions say to use])

Question 7

PBO formula

Answer 7

Beg carrying value
\+Service cost
\+Interest cost (interest rate * beg carrying value)
-Benefits paid 
\+/- Actuary gains/Losses
\+/- Prior period adjustments