Question

Elton Co. has the following postretirement benefit plan balances on January 1, 2017.

Accumulated postretirement benefit obligation		$2,250,000
Fair value of plan assets		2,250,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2018, the company amends the plan so that prior service costs of $175,000 are created. Other data related to the plan are:

		2017			2018
Service costs		$75,000			$85,000
Prior service costs amortization		0			12,000
Contributions (funding) to the plan		45,000			35,000
Benefits paid		40,000			45,000
Actual return on plan assets		140,000			120,000
Expected rate of return on assets		8	%		6	%

Indicate the postretirement-benefit–related amounts reported in the 2018 financial statements.

Elton Co.
Partial Income Statement

For the Year Ended December 31, 2018

-DividendsExpensesNet Income / (Loss)Retained Earnings, January 1, 2018 Retained Earnings, December 31, 2018 Revenues Total Expenses Total Revenues-

-Amortization of Loss    Asset Gain (Loss)    Comprehensive Income (Loss)    Liability Gain (Loss)    Postretirement Expense    Prior Service Cost Amortization    Other Comprehensive Income (Loss)- $

Elton Co. Comprehensive Income Statement December 31, 2018For the Year Ended December 31, 2018For the Quarter Ended December 31, 2018
DividendsExpensesNet Income / (Loss)Retained Earnings, January 1, 2018Retained Earnings, December 31, 2018RevenuesTotal ExpensesTotal Revenues				$XXXX
Amortization of LossAsset Gain (Loss)Comprehensive Income (Loss)Liability Gain (Loss)Plan Amendment (PSC)Postretirement ExpensePrior Service Cost AmortizationOther Comprehensive Income (Loss)
Amortization of Loss    Asset Gain (Loss)    Comprehensive Income (Loss)    Liability Gain (Loss)    Plan Amendment (PSC)    Postretirement Expense    Prior Service Cost Amortization    Other Comprehensive Income (Loss)		$
Amortization of Loss    Asset Gain (Loss)    Comprehensive Income (Loss)    Liability Gain (Loss)    Plan Amendment (PSC)    Postretirement Expense    Prior Service Cost Amortization    Other Comprehensive Income (Loss)
Amortization of Loss    Asset Gain (Loss)    Comprehensive Income (Loss)    Liability Gain (Loss)    Plan Amendment (PSC)    Postretirement Expense    Prior Service Cost Amortization    Other Comprehensive Income (Loss)
Amortization of LossAsset Gain (Loss)Comprehensive Income (Loss)Liability Gain (Loss)Plan Amendment (PSC)Postretirement ExpensePrior Service Cost AmortizationOther Comprehensive Income (Loss)				$XXXX

Elton Co. Partial Balance Sheet December 31, 2018For the Year Ended December 31, 2018For the Quarter Ended December 31, 2018
Current AssetsIntangible AssetsLiabilitiesLong-term InvestmentsProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Intangible AssetsTotal Long-term InvestmentsTotal Property, Plant and EquipmentTotal Stockholders' Equity
Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Loss (PSC)    Current Assets    Current Liabilities    Expenses    Intangible Assets    Liabilities    Long-term Investments    Long-term Liabilities    Postretirement Liability    Property, Plant and Equipment    Revenues    Stockholders' Equity    Total Assets    Total Current Assets    Total Current Liabilities    Total Expenses    Total Intangible Assets    Total Liabilities    Total Liabilities and Stockholders' Equity    Total Long-term Investments    Total Long-term Liabilities    Total Property, Plant and Equipment    Total Revenues    Total Stockholders' Equity    Stockholders’ Equity			$
Current AssetsIntangible AssetsLiabilitiesLong-term InvestmentsProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Intangible AssetsTotal Long-term InvestmentsTotal Property, Plant and EquipmentTotal Stockholders' Equity
Accounts Payable    Accounts Receivable    Accumulated Depreciation    Accumulated Other Comprehensive Income (G/L)    Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Income (PSC)    Accumulated Other Comprehensive Loss (PSC)    Common Stock    Postretirement Liability    Retained Earnings			$
Accounts Payable    Accounts Receivable    Accumulated Depreciation    Accumulated Other Comprehensive Income (G/L)    Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Income (PSC)    Accumulated Other Comprehensive Loss (PSC)    Common Stock    Postretirement Liability    Retained Earnings

Answer 1

Elton Co. Pension Worksheet - 2017 and 2018 General Entries OCI - Prior Service Cash Cost OCI -Gain/Loss Annual Pension Expense Pension Asset/Liabilities - Cr. 75,000 Dr. 225,000 Dr. 140,000 Cr. 40,000 Cr. Memo Record Project Benefit Obiligation Plan Assets 2,250,000 Cr. 2,250,000 Dr. 75,000 Cr. 225,000 Cr. 140,000 Dr. T 45,000 Dr. 40,000 Dr. 40,000 Cr. L 40,000 Dr. T 45,000 Cr. 120,000 Dr. 45,000 Cr. 115,000 Cr. . Cr. - Dr. - Dr. 175,000 Dr. 40,000 Dr. - 40,000 Dr. 115,000 Cr. Items Balance Jan.1, 2017 Service Cost Interest Cost Actual Return Unexpected Loss Contributions Benefits Journal Entry for 2017 Accumulated OCI Dec 31, 2016 Balance Dec 31, 2017 Additional PSC, 1/1/2018 Balance Jan 1, 2018 Service Cost Interest Cost Actual Return Unexpected Loss Amortization of PSC Contributions Benefits Journal Entry for 2018 Accumulated OCI Dec 31, 2017 Balance Dec 31, 2018 2,395,000 Dr 2,510,000 Cr. 175,000 Cr. 2,685,000 Cr. 85,000 Cr. 268,500 Cr. 85,000 Dr. 268,500 Dr. 120,000 Cr. 23,700 Cr. 12,000 Dr. 120,000 Dr. 23,700 Dr. L 12,000 Cr. 35,000 Cr. 35,000 Dr. 45,000 Cr. 45,000 Dr. 221,800 Dr. 35,000 Cr. 163,000 Dr. 373,500 Cr. Dr. 23,700 Dr. 40,000 Dr. 63,700 Dr. 163,000 Dr. 488,500 Cr. 2,993,500 cr._2,505,000 Dr.

1) Interest Cost = (Projected Benefit obligation at the beginning of year x Interest rate) 2017 = (2,250,000 10%) 225,000 2018 = (2,685,000 10%) 268,500 Calculation of Unexpected loss/(gain) Expected Return = (Plan Assets at the beginning of year x Expected Return) 2017 Expected return = (2,250,000 x 8%) 180,000 Actual Return (140,000) Unexpected loss 40,000 2018 Expected return = (2,395,000 x 6%) 143,700 Actual Return (120,000) Unexpected loss/(gain) 23,700

Elton Co. Income Statement (Partial) For the Year Ended December 31,2018 Expenses Pension Expense 221,800 $ XXXX Elton Co. Comprehensive Income Statement For the Year Ended December 31, 2018 Net Income Other Comprehensive Income (Loss) Asset gain(loss) (23,700) Plan Amendment (PSC) (175,000) Prior service cost amortization 12,000 Comprehensive Income (186,700) $ XXXX Elton Co. Partial Balance Sheet December 31, 2018 Liabilities Pension liability Stockholders' Equity Accumulated other Comprehensive loss (PSC) Accumulated other Comprehensive loss (G/L) $ 488,500 163,000 63,700