Question

Tata Steel Corporation has provided the following information regarding their defined benefit pension plan for the year 2018:

Current service cost	$ 235,000
Contribution to the plan	262,500
Past service cost, effective December 31, 2018	50,000
Actual return on plan assets	160,000
Benefits paid	100,000
Net defined benefit liability at January 1, 2018	400,000
Plan assets at January 1, 2018	1,600,000
Defined benefit obligation at January 1, 2018	2,000,000
Interest/discount rate on the DBO and plan assets	10%

In addition, Tata Steel follows IFRS.

Required:

1. Prepare a continuity schedule for 2018 for the defined benefit obligation.

2. Prepare a continuity schedule for 2018 for the plan assets.

3. Calculate pension expense for the year 2018.

4. Prepare all pension journal entries recorded by Tata Steel in 2018.

What pension amount will appear on Tata Steel’s statement of financial position at December 31, 2018?

Answer 1

Items	Pension Expense	Cash	OCI - Prior Service Cost	OCI - Gain/ Loss	Pension - Aset / Liability	Projected Benefit Obligation	Plan Assets
								Balance , January 1, 2018					400000	2000000	1600000
																Service cost	235000					235000
Interest cost	200000					200000
Actual return	-160000						160000
Unexpected Gain
Amotization of PSC	50000		50000
Contributions		-262500					262500
Benefits						-100000	-100000
Liability increase					12500	335000	322500
Journal Entry
Balance December 31, 2018	325000	-262500	50000		412500	2335000	1922500
	Debit	Credit
Pension Expense	325000
Cash		262500
OCI- Prior Service		50000
Pension Asset/ Liability		12500