Accounting -Melanie Vail Corp. sponsors a defined benefit pension plan for its employees

| January 30, 2017

Melanie Vail Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2015, the following balances relate to this plan.

Plan assets


Projected benefit obligation


Accumulated OCI (PSC)


As a result of the operation of the plan during 2015, the following additional data are provided by the actuary.

Service cost for 2015


Settlement rate


Actual return on plan assets in 2015


Amortization of prior service cost


Expected return on plan assets


Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions


Contributions in 2015


Benefits paid retirees in 2015


Click here to download the Excel Template linked here, containing the spreadsheets you will need for this exercise.

Use the spreadsheet Pensions to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss.
Compute the same items as in (#1), assuming that the settlement rate is now 7% and the expected rate of return is 10%.
Prepare the journal entry using the spreadsheet Journal Entries to record pension expense in 2015. You need to prepare journal entries for only #1 above.
Indicate the reporting of the 2015 pension amounts in the income statement and balance sheet using the spreadsheet Pensions. You need to show financial statements’ presentations for only #1 above.

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