Question

Lightfoot Industries sponsors a defined-benefit pension plan for its employees. As of January 1, 2020, the pension reported a Projected Benefit Obligation of $1,125,000 and fair value of Plan Assets of $900,000.

Lightfoot also reports the following as of January 1, 2020:

	Dr (Cr)
Net pension asset/liability	$                             (225,000)
Accumulated other comprehensive income (AOCI)
Prior service cost	$                                  60,000
Gains/Losses	$                                           -

Additionally, the following information is available for 2020:

Service cost	$                               210,000
Actual return of plan assets	$                                  70,000
Amortization of prior service costs	$                                    6,000
Benefits paid to retirees	$                               315,000
Contributions to the plan	$                               150,000
Discount rate	9.0%
Expected return rate	7.0%

Determine pension expense for 2020

Prepare the 2020 journal entry to reflect pension activity for Lightfoot Industries

What is the Net Pension Asset/Liability at the end of 2020?

Answer 1

ANSWER:

Pension expense   IFRS   ASPE
Interest costs (PBO* discount rate)   -     -
Add: Service costs (Given)   210,000   210,000
Less: Return on plan of assets (7% *$805,000)   - 56,350   - 56,350
Less: Amort. of prior service costs   - 6,000   -
Add: Amort. of actuarial losses   -     -
Pension expense   147,650   153,650
Plan assets   IFRS   ASPE
Opening Plan assets   900,000   900,000
Funding   150,000   150,000
Actual return   70,000   70,000
Less: Payments to retired employees   - 315,000   - 315,000
Plan assets     805,000   805,000

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