ACC423 Assignment 1 and 2 - ACC 423 assignments (Graded A+) - 18700

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assignment: 1

The Terry Bradshaw Corporation sponsors a defined benefit pension plan for its employees and you are their pension accountant. You have you asked around the accounting department and you have gathered the following information and data related to the operation of the plan for the year 2011 in which no benefits were paid. You have learned the following. 1. The actuarial present value of future benefits earned by employees for services rendered in 2011 amounted to $56,000. 2. The company's funding policy requires a contribution to the pension trustee amounting to $145,000 for 2011. 3. As of January 1, 2011, the company had a projected benefit obligation of $1,000,000, an accumulated benefit obligation of $800,000, and an unrecognized prior service cost of $400,000. The fair value of pension plan assets amounted to $600,000 at the beginning of the year. The market-related asset value was equal to $600,000. The actual and expected return on plan assets was $54,000. The settlement rate was 9%. No gains or losses occurred in 2011 and no benefits were paid. 4. Amortization of unrecognized prior service cost was $40,000 in 2011. Amortization of unrecognized net gain or loss was not required in 2011. Instructions a. Determine the amounts of the components of pension expense that should be recognized by the company in 2011. b. Prepare the journal entry or entries to record pension expense and the employer's contribution to the pension trustee in 2011. c. Indicate the amounts that would be reported on the income statement and the balance sheet for the year 2011. The accumulated benefit obligation on December 31, 2011, was $830,000.

Assignment: 2

The Peter Boyle Incorporation’s controller, Laura Dekker, has come to your CPA firm for a consultation because she is considering doing something very different in business today. That is to start a defined benefit plan for her employees She know that this is not conventional but is going to try it anyway. You know that most people are not familiar with the terminology of running a defined pension plan. Nor are they familiar with the components of pension costs that the terms represent must be dealt with appropriately if generally accepted accounting principles are to be reflected in the financial statements of entities with pension plans. The managing partner of the firm wants you to prepare an e-mail to Laura Dekker and explain the following in the order he gives you. Start by defining a private pension plan and how a contributory pension plan differs from a noncontributory plan? Next Differentiate between “accounting for the employer” and “accounting for the pension fund.” Be specific. Explain the terms “funded” and “pension liability” as they relate to: 1. The pension fund. 2. The employer. Discuss the theoretical justification for accrual recognition of pension costs. Discuss the relative objectivity of the measurement process of accrual versus cash (pay-as-you-go) accounting for annual pension costs. And finally, distinguish among the following as they relate to pension plans. 1. Service cost. 2. Prior service costs. 3. Vested benefits.
 
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