Question

At the end of the current year, Kennedy Co. has a defined benefit obligation of $335,000 and pension plan assets with a fair value of $245,000. The amount of the vested benefits for the plan is $225,000. Kennedy has an actuarial gain of $8,300. What account and amount(s) related to its pension plan will be reported on the company’s statement of financial position?

Answer 1

The account and amount(s) related to Kennedy Co.'s pension plan that will be reported on the company’s statement of financial position are pension liability and $90,00 respectively.

Step-by-step explanation:

The difference between defined benefit obligation and fair value of plan assets is recorded on a balance sheet.

Defined benefit obligation is $335,000 which is higher than the fair value of plan assets of $245,000. Hence, the net result is pension liability.

Pension liability = defined benefit obligation - fair value of plan assets = $335,000 - $245,000 = $90,000.

The account and amount(s) related to Kennedy Co.'s pension plan that will be reported on the company’s statement of financial position are pension liability and $90,00 respectively.

Actuarial gain is part of pension expense. Vested benefits amount is recorded in the notes to account.