The discount (or settlement) rate applicable to the plan is 10%. On January 1, 2022, the company amends the pension agreement resulting in a prior service cost of $260,000. The company uses
accounting spreadsheet
please help me answer the xlx file attached. all instrictions are in the word doc file
Requirements: 2 sheets
Excel Problem: Upload your solution to the dropbox on eLearning (Due date: March 21, 2023)
HRC Company sponsors a defined benefits pension plan to its employees. On January 1, 2021, the balances related to pension plan were as follows:
Projected benefit obligation (PBO) $2,600,000
Fair value of plan assets $2,500,000
AOCI Prior service cost -0-
AOCI Net Loss -0-
The discount (or settlement) rate applicable to the plan is 10%. On January 1, 2022, the company amends the pension agreement resulting in a prior service cost of $260,000. The company uses straight-line amortization of prior service costs over the average remaining service life of the employees. Other data related to the pension plan are as follows:
Required: Using the Excel template provided (or you can use your own template as well):
Prepare Pension worksheet for the year 2021 and 2022 in Excel. Make sure to include all accompanying computations at the bottom of the worksheet (such as amortization of gain/losses).
Prepare the necessary journal entries for each year associated with the defined benefits pension plan for HRC.
What different amount(s)/ balances will be reported in the income statement and balance sheet at the end of year 2021 and 2022?
Is the pension plan underfunded or overfunded at the end of 2022 based on your computations?
Based on your answer for requirement 4, does HRC needs to increase or decrease the contributions to the pension plan in future assuming no immediate changes in actuarial assumptions? Why?
What journal entry would be recorded by HRC at the end of 2021 and 2022, if it was a defined contributions plan instead of defined benefits pension plan? Which of the two pension plans is a better choice for the HRC company and Why?
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