ch20 (改)

EXERCISE 20.
1 (15–20 minutes)
(a) Computation of pension expense:

Service cost ..................................................... $60,000
Interest expense ($500,000 X .10) .................. 50,000
Interest revenue .............................................. (15,000)
Pension expense for 2019 .............................. $95,000
(b) Pension Expense .................................................... 95,000

Cash ................................................................. 90,000
Pension Asset /Liability................................... 5,000
LO: 1, Bloom: AP, Difficulty: Simple, Time: 15-20, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
EXERCISE 20.2 (10–15 minutes)
Computation of pension expense:

Service cost ................................................................. €90,000
Interest expense (€700,000 X 10%) ........................... 70,000
Interest revenue on plan assets (€640,000 X 10%) (64,000)
Pension expense for 2019 .......................................... €96,000
Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only) 20-1
20-15
VELDRE SpA
Pension Worksheet—2019
General Journal Entries Memo Record
Annual Cash Pension Defined Plan Assets
Pension Asset/Liability Benefit
Items Expense Obligation
Balance, January 1, 2019 60,000 Cr. 700,000 Cr. 640,000 Dr.
Service cost 90,000 Dr. 90,000 Cr.
Copyright © 2018 Wiley
Interest expense* 70,000 Dr. 70,000 Cr.

Interest revenue** 64,000 Cr. 64,000 Dr.
Contributions 105,000 Cr. 105,000 Dr.
Benefits 40,000 Dr. 40,000 Cr.
Journal entry for 2019*** 96,000 Dr. 105,000 Cr. 9,000 Dr.
Balance, Dec. 31, 2019 51,000 Cr. 820,000 Cr. 769,000 Dr.
*€70,000 = €700,000 X 10%.

Kieso, IFRS, 3/e, Solutions Manual
**€640,000 X 10%
***Pension Expense .................................................. 96,000

***Pension Asset/Liability ......................................... 9,000
Cash.............................................................. 105,000
LO: 2, Bloom: AP, Difficulty: Moderate, Time: 15-25, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
(For Instructor Use Only)

BOUDREAU PLC.
Annual Pension Defined
Pension Asset/ Benefit Plan
Items Expense Cash Liability Obligation Assets
Balance, January 1, 2019 490,000 Cr. 490,000 Dr.

Journal entry, December 31 40,000 Dr. 25,000 Cr. 15,000 Cr.
Balance, December 31, 2019 15,000 Cr. 535,800 Cr. 520,800 Dr.
*£39,200 = £490,000 X 8%.

**£39,200 = £490,000 X 8%.
20-3
(a) Computation of Actual Return on Plan Assets
Fair value of plan assets at 12/31/19 ....................... ₺ 2,725,000

Fair value of plan assets at 1/1/19 ........................... (2,400,000)
Increase in fair value of plan assets ....................... 325,000
Deduct: Contributions to plan during 2019 ........... ₺280,000
Less benefits paid during 2019 ................ 350,000 70,000
Actual return on plan assets for 2019 ..................... ₺ 395,000
(b) Asset Gain = [(₺2,400,000 X 7%) – ₺395,000] = ₺227,000.

The gain is reported in other comprehensive income in the statement
of comprehensive income.
20.4 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
YANG LTD

Pension Asset/ Benefit Plan
Items Expense Cash Liability Obligation Assets
Past service cost 120,000 Dr. 120,000 Cr.
Balance, Jan. 1, 2019 680,000 Cr. 546,200 Dr.
Journal entry for 2019 190,042 Dr. 65,000 Cr. 125,042 Cr.
*¥61,200 = ¥680,000 X .09.
**¥49,158 = ¥546,200 X .09.
LO: 2,3, Bloom: AP, Difficulty: Moderate, Time: 15-25, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
20-5
20-19
(a)

Annual
Pension Pension Defined Benefit
Expense Cash OCI - Gain/Loss Asset/Liability Obligation Plan Assets
Balance, January 1, 2019 1,400,000 Cr. 6,300,000 Cr. 4,900,000 Dr.

Interest expense ($6,300,000
X .07) 441,000 Dr. 441,000 Cr.

Interest revenue ($4,900,000
X .07) 343,000 Cr. 343,000 Dr.
Benefits 300,000 Dr. 300,000 Cr.
Asset Loss ($343,000 –
$295,000) 48,000 Dr. 48,000 Cr.
Liability Loss 89,000 Dr. 89,000 Cr.
Journal entry for 2019 218,000 Dr. 400,000 Cr. 137,000 Dr. 45,000 Dr.
Accumulated OCI 12/31/18 0

Balance, Dec. 31, 2019 137,000 Dr. 1,355,000 Cr. 6,650,000 Cr. 5,295,000 Dr.
EXERCISE 20.7 (Continued)
(b) Pension Expense ........................................................ 218,000

OCI – G/L ..................................................................... 137,000
Pension Asset/Liability............................................... 45,000
Cash ............................................................ 400,000
(c) The pension loss of $137,000 ($48,000 asset loss; $89,000 liability loss)
is recognized in other comprehensive income. The balance at 12/31/19
of $137,000 is reported in accumulated other comprehensive income in
shareholders’ equity.

(a) Note to financial statements disclosing components of 2019 pension
expense:
Note X: Net pension expense for 2019 is composed of the following

components of pension cost:
Service cost .............................................................. € 94,000
Interest expense (€2,618,780 X .06) ........................ 157,127
Interest revenue (€2,195,000 X .06) ......................... (131,700)
Pension expense .............................................. € 119,427
(b) Other comprehensive income, 2019
Asset loss (€131,700 – €130,000) ............................ € 1,700

Other comprehensive loss ...................................... € 1,700
Comprehensive income, 2019

Net income ............................................................... € 35,000
Other comprehensive loss ...................................... 1,700
Comprehensive income........................................... € 33,300
(c) Accumulated OCI at December 31, 2019 is €1,700; this amount is

comprised of the following:
Gain/Loss
Balance Jan. 1, 2019 € 0
Asset loss* 1,700 Dr.
Balance Dec. 31, 2019 € 1,700 Dr.
*€131,700 – €130,000.
A pension worksheet follows to provide supporting calculations.
20-8 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)


Pension OCI— Asset/ Benefit
Expense Cash Gain/Loss Liability Obligation Plan Assets
Balance, Jan. 1, 2019 423,780 Cr. 2,618,780 Cr.1 2,195,000 Dr.2
Interest expense 157,127 Dr. 157,127 Cr.
Interest revenue 131,700 Cr. 131,700 Dr.
Benefits 140,000 Dr. 140,000 Cr.

Asset loss 1,700 Dr. 1,700 Cr.
Journal entry for 2019 119,427 Dr. 93,329 Cr. 1,700 Dr. 27,798 Cr.
Accumulated OCI, Dec. 31, 2018 0
Balance, Dec. 31, 2019 1,700 Dr. 451,578 Cr. 2,729,907 Cr. 2,278,329 Dr.
1
€2,729,907 + €140,000 – €157,127 – €94,000.
2
€2,278,329 + €140,000 – €93,329 – €130,000.
20-22
20-23
(a) WEBB CORP.

Pension Worksheet
Pension OCI— Asset/ Benefit
Items Expense Cash Gain/Loss Liability Obligation Plan Assets
Balance, Jan. 1, 2019 120,000 Cr. 600,000 Cr. 480,000 Dr.

Asset gain*** 26,200 Cr. 26,200 Dr.
Liability increase 76,000 Dr. 76,000 Cr.

Balance, December 31, 2019 49,800 Dr. 168,000 Cr. 717,000 Cr. 549,000 Dr.
*$36,000 = $600,000 X .06.

**$480,000 X .06.
***$55,000–$28,800
(b) Journal Entry
Pension Expense .................................................................. 97,200
Other Comprehensive Income (G/L) ................................... 49,800
Cash .......................................................................... 99,000
Pension Asset /Liability ........................................... 48,000
(a) Pension expense for 2019 composed of the following:

Service cost ....................................................... £56,000
Interest expense
(9% X £900,000) ............................................. 81,000
Interest on plan assets
(£600,000 X 9%) ............................................ (54,000)
Pension expense ....................................... £83,000
(b) Pension Expense ...................................................... 83,000
Pension Asset /Liability ............................................ 68,000
Other Comprehensive Income (G/L) ................ 6,000
Cash ................................................................... 145,000
(c) Income Statement

Pension expense ............................................... £83,000
Comprehensive Income Statement
Net income ................................................................ £ XXXX
Other comprehensive income
Asset gain (£60,000 – £54,000).............................. 6,000
Comprehensive income ........................................... £ XXXX
Statement of Financial Position
Liabilities
Pension liability ........................................................ £232,000*
*Defined benefit obligation £(1,037,000)
Plan assets 805,000
Pension liability £ (232,000)
Defined Benefit
Partial worksheet Plan Assets Obligation
Bal. January 1, 2019 £600,000 £ 900,000
Service cost 56,000
Interest expense 81,000
Actual return 60,000
Contribution 145,000
Bal. December 31, 2019 £805,000 £1,037,000
Equity
Accumulated OCI (G/L) Jan. 1, 2019 £40,000 (Loss)
Asset gain 6,000
Accumulated OCI (G/L) Dec. 31, 2019 £34,000 (Loss)
(a) Pension expense for 2019 composed of the following:

Service cost ................................................... € 77,000
Interest expense
(10% X €1,500,000) .................................... 150,000
Interest revenue
(10% X €800,000) ....................................... (80,000)
Pension expense ........................................... € 147,000
(b) Pension Expense .................................................. 147,000

Pension Asset /Liability ........................................ 303,000
Cash ............................................................... 250,000
Other Comprehensive Income (G/L) ............ 200,000
(To record pension expense and
employer’s contribution)
(c) Income Statement:

Pension expense ........................................... € 147,000
Comprehensive Income Statement

Net income ..................................................... € XXXX
Other comprehensive income (loss)
Liability gain ............................................ 200,000
Comprehensive income........................................ € XXXX
Statement of Financial Position

Liabilities
Pension liability ..................................... € 397,000*
Equity
Accumulated OCI (G/L) ................................. € 200,000
*Defined benefit obligation, Dec. 31, 2019 €(1,527,000)

Plan assets, Dec. 31, 2019 1,130,000
Pension liability € (397,000)

Note to instructor: To prove the amounts reported, a worksheet might be prepared as follows:

Annual Defined
Pension OCI— Pension Benefit
Items Expense Cash Gain/Loss Asset/Liability Obligation Plan Assets
Balance, Jan. 1, 2019 700,000 Cr. *1,500,000 Cr. 800,000 Dr.
Liability gain 200,000 Cr. 200,000 Dr.

Journal entry, for 2019 147,000 Dr. 250,000 Cr. 200,000 Cr. 303,000 Dr.
Balance, Dec. 31, 2019 200,000 Cr. 397,000 Cr. 1,527,000 Cr. 1,130,000 Dr.
*€1,500,000 X 10%.
**€800,000 X 10%.
LO: 3,4,5, Bloom: AP, Difficulty: Moderate, Time: 20-30, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
20-26
(a) Actual Return = (Ending – Beginning) – (Contributions – Benefits)

Fair value of plan assets,
December 31, 2019 ..................................................... £2,620
Deduct: Fair value of plan assets,
January 1, 2019 ........................................................... 1,700
Increase in fair value of plan assets ............................. 920
Deduct: Contributions.................................................... £700
Less benefits paid ............................................ 200 500
Actual return on plan assets in 2019 ............................ £ 420
(b) Computation of pension liability gains and losses and pension asset gains and losses.
1. Difference between 12/31/19 actuarially computed DBO and 12/31/19 recorded

defined benefit obligation (DBO):
DBO at end of year ........................................ £3,300
DBO per memo records:
1/1/19 DBO ................................................. £2,500
Add interest (10%) ..................................... 250
Add service cost ........................................ 400
Less benefits paid ..................................... 200 2,950
Liability loss............................................... £350
2. Difference between actual and expected fair value of

plan assets
12/31/19 actual fair value
of plan assets ........................................ 2,620
Expected fair value
1/1/19 fair value of plan assets ................. 1,700
Interest revenue
(£1,700 X 10%) ....................................... 170
Add contributions ..................................... 700
Less benefits paid ..................................... 200 (2,370)
Asset gain .................................................. 250
Net gain or (loss) ........................................... (£100)
(c) The amount recorded in other comprehensive income is the asset gain and
liability loss:
Asset gain .................................................................................... £ 250
Liability loss ................................................................................. 350
Net loss ........................................................................................ 100
Accumulated OCI (G/L)
12/31/18 ........................................................................................ 0
Accumulated OCI (G/L) ........................................................................ £ 100
LO: 1,4,5, Bloom: AP, Difficulty: Moderate, Time: 35-45, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
20.14 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)

ERICKSON PLC
General Journal Entries Memo Record Entries
Defined
Annual Pension OCI— Pension Benefit Plan
Items Expense Cash Gain/Loss Asset/Liability Obligation Assets
Balance, Jan. 1, 2019 800 Cr. 2,500 Cr. 1,700 Dr.
Service cost 400 Dr. 400 Cr.
Interest expense(a) 250 Dr. 250 Cr.
Interest revenue(b) 170 Cr. 170 Dr.
Contributions 700 Cr. 700 Dr.
Benefits 200 Dr. 200 Cr.
Asset gain (c) 250 Cr. 250 Dr.
Liability increase(d) 350 Dr. 350 Cr.
Journal entry for 2019 480 Dr. 700 Cr. 100 Dr. 120 Dr.
Balance, Dec. 31, 2019 100 Dr. 680 Cr. 3,300 Cr. 2,620 Dr.
(a)£2,500 X 10%
(b)
£1,700 X 10%
(c)
Actual return £420
Interest revenue (£1,700 X 10%) (170)
Asset gain £250
(d)
£350 = £3,300 – (£2,500 + £400 + £250 – £200)
20-28
Journal entries 12/31/19
Other Comprehensive Income (G/L) ..................... 100

Pension Expense ................................................... 480
Pension Asset /Liability ......................................... 120
Cash ................................................................ 700
Statement of Financial Position at December 31, 2019
Liabilities
Pension liability.............................................. £680
Shareholders’ equity
Accumulated other comprehensive
loss (G/L) .................................................... £100
LO: 2, Bloom: AP, Difficulty: Complex, Time: 40-50, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
(a) Computation of pension expense:

Service cost ................................................... $ 80,000
Interest expense ($700,000 X .10)................. 70,000
Interest revenue ($675,000* X .10) ................ (67,500)
Pension expense for 2019 ............................ $ 82,500
*$700,000 – $25,000
Pension Expense .................................................. 82,500

Pension Asset /Liability................................. 32,500
Cash ............................................................... 50,000
(b) Income Statement:

Pension expense ........................................... 82,500
Statement of Financial Position:

Liabilities
Pension liability .................................... $ 57,500*
*$25,000 + $32,500
See next page for pension worksheet.
20.16 Copyright © 2018 WILEY Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)


Defined
Annual Pension Pension Benefit Plan
Expense Cash Asset/Liability Obligation Assets
Balance, Jan. 1, 2019 25,000 Cr. 700,000 Cr. 675,000 Dr.**
• $700,000 X 10%
**$700,000 – $25,000.
***$675,000 X 10%
20-30
(a) Below is the completed worksheet, indicating debit and credit entries.

Annual Defined
Pension OCI—Gain/ Pension Benefit Plan
Expense Cash Loss Asset/Liability Obligation Assets
Service cost 500 Dr. 500 Cr.
Interest expense 280 Dr. 280 Cr.
Interest revenue 170 Cr. 170 Dr.
Contributions 800 Cr. 800 Dr.
Benefits 200 Dr. 200 Cr.
Asset gain 50 Cr. 50 Dr.
Liability loss 365 Dr. 365 Cr.
Journal entry 610 Dr. 800 Cr. 315 Dr. 125 Cr.
Balance, Dec. 31, 2019 315 Dr. 1,225 Cr. 3,745 Cr. 2,520 Dr.
(b) Pension Expense ......................................... 610

Other Comprehensive Income (G/L) .......... 315
Pension Asset/Liability ........................... 125
Cash ......................................................... 800
Postretirement benefit expense is comprised of the following:
Service cost ............................................................. –P 45,000

Interest expense (8% X –P 330,000) ......................... 26,400
Interest revenue (8% X –P 110,000) ......................... (8,800)
Postretirement expense .......................................... –P 62,600

Annual
Postretirement Postretirement
Expense Cash Asset/Liability DPBO Plan Assets
Postretirement Expense ........................................ 62,600

Postretirement Asset/Liability ....................... 52,600
Cash ................................................................ 10,000
Service cost ................................................................... $ 83,000

Interest expense
benefit obligation (10% X $710,000) .......................... 71,000
Interest revenue ............................................................ (34,000)
Postretirement expense ................................................ $120,000
Service cost ................................................................... € 90,000

Interest expense
(9% X €760,000) ............................................................. 68,400
Interest revenue (€710,000 X 9%) ................................. (63,900)
Postretirement expense ................................................ € 94,500
See worksheet on next page.
20-33
ENGLEHART AG
Postretirement Benefit Worksheet—2019
Annual
Postretirement OCI— Postretirement Plan

Items Expense Cash Gain/Loss Asset/Liability DPBO Assets

Asset loss*** 1,900 Dr. 1,900 Cr.
Accumulated OCI, Dec. 31, 2018 100 Dr.
Balance, Dec. 31, 2019 2,000 Dr. 90,400 Cr. 878,400 Cr. 788,000 Dr.
*(€760,000 X 9%)
**(€710,000 X 9%)
***€63,900 – €62,000
(a) Below is the completed worksheet, indicating debit and credit entries.

Other
Annual Comprehensive Postretirement Plan
Expense Cash Income—G/L Asset/Liability DPBO Assets

Asset loss 8,800 Dr. 8,800 Cr.
Accumulated OCI, Dec. 31, 2018 18,200 Dr.
Balance, Dec. 31, 2019 27,000 Dr. 314,900 Cr. 497,900 Cr. 183,000 Dr.
(b) Postretirement Expense ................................... 82,100

Other Comprehensive Income (G/L) ............... 8,800
Cash ........................................................... 66,000
Postretirement Asset/Liability .................. 24,900
(c) The discount (settlement) rate can be determined by dividing the interest
expense by the beginning DPBO:
€36,900 ÷ €410,000 = 9%

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EXERCISE 20.

(a) Computation of pension expense:

(b) Pension Expense .................................................... 95,000

EXERCISE 20.2 (10–15 minutes)

Computation of pension expense:

Interest expense* 70,000 Dr. 70,000 Cr.

*€70,000 = €700,000 X 10%.

***Pension Expense .................................................. 96,000

EXERCISE 20.4 (10–15 minutes)

Interest revenue** 39,200 Cr. 39,200 Dr.

*£39,200 = £490,000 X 8%.

(a) Computation of Actual Return on Plan Assets

Fair value of plan assets at 12/31/19 ....................... ₺ 2,725,000

(b) Asset Gain = [(₺2,400,000 X 7%) – ₺395,000] = ₺227,000.

Annual Pension Defined

*¥61,200 = ¥680,000 X .09.

**¥49,158 = ¥546,200 X .09.

EXERCISE 20.7 (20–25 minutes)

General Journal Entries Memo Record

Service cost 120,000 Dr. 120,000 Cr.

X .07) 441,000 Dr. 441,000 Cr.

Accumulated OCI 12/31/18 0

(b) Pension Expense ........................................................ 218,000

EXERCISE 20.8 (25–35 minutes)

Note X: Net pension expense for 2019 is composed of the following

(b) Other comprehensive income, 2019

Asset loss (€131,700 – €130,000) ............................ € 1,700

Comprehensive income, 2019

(c) Accumulated OCI at December 31, 2019 is €1,700; this amount is

A pension worksheet follows to provide supporting calculations.

EXERCISE 20.8 (Continued)

General Journal Entries Memo Record

Benefits 140,000 Dr. 140,000 Cr.

(a) WEBB CORP.

Service cost 90,000 Dr. 90,000 Cr.

Accumulated OCI, Dec. 31, 2018 0

*$36,000 = $600,000 X .06.

(a) Pension expense for 2019 composed of the following:

(c) Income Statement

EXERCISE 20.11 (20–30 minutes)

(a) Pension expense for 2019 composed of the following:

(b) Pension Expense .................................................. 147,000

(c) Income Statement:

Comprehensive Income Statement

Statement of Financial Position

*Defined benefit obligation, Dec. 31, 2019 €(1,527,000)

EXERCISE 20.11 (Continued)

General Journal Entries Memo Record

Contributions 250,000 Cr. 250,000 Dr.

(a) Actual Return = (Ending – Beginning) – (Contributions – Benefits)

1. Difference between 12/31/19 actuarially computed DBO and 12/31/19 recorded

2. Difference between actual and expected fair value of

EXERCISE 20.13 (40–50 minutes)

Journal entries 12/31/19

Other Comprehensive Income (G/L) ..................... 100

Statement of Financial Position at December 31, 2019

EXERCISE 20.14 (15–20 minutes)

(a) Computation of pension expense:

Pension Expense .................................................. 82,500

(b) Income Statement:

Statement of Financial Position:

See next page for pension worksheet.

EXERCISE 20.14 (Continued)