On January 1, 2016, Parkway adopted a defined benefit pensionplan, with retroactive benefits. Prior service cost of $2,180,000,amortized straight-lined over 16 years.
Service Cost 340,000 348,000
Projected benefit obligation (1/1) 2,180,000 2,738,000
Plan assets (1/1) 0 670,000
Discount rate 10% 10%
Expected/actual long-term rate of return 0% 9%
Contributions 670,000 700,000
Projected benefit obligation (end of 2017) 3,359,800
Fair value of plan assets 1,430,300
1. Compute the amount of Parkway’s pension expense for 2016 and2017.
2. Prepare all the journal entries related to Parkway’s pensionplan for 2016 and 2017.
3. What is the total accrued/prepaid pension cost at the end of2017? Is it an asset or a liability?
