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Instructions: Refer to the questions done in class together with the excel templates using the spreadsheet approach for defined benefit plans. You are required to use excel templates in your solution and you are welcome to link your journal entries to your spreadsheet. The assignment may be completed individually or in pairs. Make sure names are clearly marked on the front page of the assignment.

Harford Corp. sponsors a defined benefit plan for its employee group. The following data pertains to the plans first 2 years in existence:

Year 1

Defined Benefit Obligation, January 1^st $55,000

Fair Value of Plan Assets, January 1^st $40,000

Plan amendment during year 1 resulting in

additional benefits payable to employee group $15,000

Actuarial revaluation of DBO (increase) $ 4,500

Funding of plan assets, at end of year $ 6,750

Current Service Cost $ 5,250

Benefits paid to retirees, during the year $ 1,800

Actual return on Plan Assets $ 2,500

Year 2

Actuarial revaluation of DBO (decrease in liability) $ 900

Funding of plan assets, during the year $ 4,500

Current Service Cost $ 6,000

Benefits paid to retirees, at end of year $ 6,000

Actual return on Plan Assets $ 225

Additional information:

• The company has a December 31^st year end.
• The plan is non-contributory.
• The companys long-term debt is subject to a 6% discount rate.
• Amounts are in thousands of Canadian dollars, and you are required to keep them like this for consistency.

Required:

1. Prepare all journal entries required for Year 1 (including Service Cost, Interest, Actuarial Gains/Losses, Funding Contributions and Retirement Benefit Payments) 16 marks

Determine the following: (You are required to use a pension spreadsheet for these parts as this will be graded). You will need to complete the spreadsheet for both years for full marks. 28 marks

2. Balance of Defined Benefit Obligation, December 31^st Year 1 (6 marks)
3. Balance of Plan Assets, December 31^st Year 1 (6 marks)
4. Balance of Net Defined Pension Liability (Asset), December 31^st Year 1 (1 mark)
5. Total Pension Expense for Year 1 (2 marks)
6. Accumulated OCI for Year 1 (2 marks)
7. Balance of Defined Benefit Obligation, December 31^st Year 2 (3 marks)
8. Balance of Plan Assets, December 31^st Year 2 (3 marks)
9. Balance of Net Defined Pension Liability (Asset), December 31^st Year 2 (1 mark)
10. Total Pension Expense for Year 2 (2 marks)

Accumulated OCI for Year 2 (2 marks)

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