The
following is partial information related to Stanley Ltd.’s non-pension,
post-retirement benefit plan at December 31, 2011:
Accrued
post-retirement benefit obligation, accounting basis ……………$190,000
Accrued
post-retirement benefit obligation, funding basis ……………... 160,000
Plan
assets (at fair value) ………………………………………………… 130,000
Past
service cost arising in current year …………………………………. 12,000
Transitional
liability arising in current year …………………………….. 20,000
Amortization
expenses of $1,000 and $3,000 were incurred in the year related to the past
service costs and transitional liability, respectively.
Instructions
(a)
Prepare a schedule reconciling the funded status with the asset/liability
reported on the balance sheet at December 31, 2011, assuming that Stanley Ltd.
applies the deferral and amortization approach.
(b)
Prepare a schedule reconciling the funded status with the asset/liability
reported on the balance sheet at December 31, 2011, assuming that Stanley Ltd.
applies the immediate recognition approach.
(a) Accrued post-retirement benefit obligation
(Credit) $(190,000)
Plan assets at fair value (Debit) 130,000
Funded status (Credit) (60,000 )
Unrecognized past service cost (Debit) * ( 11,000
Unrecognized transition amount (Debit) ** 17,000
Accrued post-retirement benefit liability
(Credit) $
(32,000 )
* $12,000 – $1,000 (amortization)
** $20,000 – $3,000 (amortization)
(b)
Accrued post-retirement benefit obligation
(Credit) $(160,000)
Plan assets at fair value (Debit) 130,000
Funded status (Credit) $ (30,000 )
