On January 1, 2018, Gillock Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cost for each year of 2018 and 2019 was $600,000. The interest rate used to determine the projected benefit obligation is 10%. Both the actual and the expected return on plan assets are 8% for both years. Gillock funded the plan in the amount of $400,000 each January 1, beginning on January 1, 2018. } What pension liability should Gillock report in its balance sheet for the year ended December 31, 2019

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Business

Elena Lewis

21 January, 15:17

On January 1, 2018, Gillock Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cost for each year of 2018 and 2019 was $600,000. The interest rate used to determine the projected benefit obligation is 10%. Both the actual and the expected return on plan assets are 8% for both years. Gillock funded the plan in the amount of $400,000 each January 1, beginning on January 1, 2018. } What pension liability should Gillock report in its balance sheet for the year ended December 31, 2019

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Santiago Rivers · Answer 1

Find the answer below in explanation

Explanation:

Gillock Climbing Academy Pension Expense for the year 2019 will be recorded as

Service cost ... 600,000.00

Interest (600000 * 10%) ... 60,000.00

plan assets (40000 from 2018 + 32000 interest + 400000 made in current year) ... 832000

Expected return Interest on plan asset (832000*8%) ... 66,560.00

Pension Expense for the year ended December 31, 2019 = 600000 - (66,560.00 - 60000)

= 600,000-6,560

= $593,440.00