Pension Accounting (Using Worksheet Format, Projected Benefit Obligation, Plan Assets, J/E Accts.)

Accounting for pensions using a pension worksheet format approach, the accounts include (1) pension expense (annual expense), (2) cash pension contributions), (3) other comprehensive income (prior service cost), (4) pension asset/liability (increase/decrease), these accounts are for the journal entries required, the (5) projected benefit obligation & (6) plan assets are memo accounts which maintain balances (1) Projected Benefit Obligation (PBO): Present value of vested & nonvested benefits accrued to date, (2) Plan Assets: Investments in stocks, bonds, etc., the pension expense includes: (1) Service Cost: Increase in pension benefits payable, present value of new benefits earned, (2) Interest Cost: Interest expense accrued each year on discounted basis, (3)Actual Return On Plan Assets: Interest & dividends that accumulate within the fund & increases/decreases in market value, (4) Amortization of Prior Service Cost: Increase or decrease benefits for employee service provided in prior years, retroactive benefits to pension expense in the future, to determine pension asset or liability, Make comparison between PBO & Plan Assets To determine Pension Asset or Liability, PBO less than Plan Assets, then Pension Asset, PBO greater than Plan Assets, then Pension Liability, detailed accounting by Allen Mursau