[lauren.wilson14]

Does anyone know if there is any place to get a better explanation on some of these simulations? I am so annoyed with Becker and how they don’t explain the journal entries for the majority of there sims.

Here is an example of one

The pension plan for General GAP, a U.S. company, ended Year 6 with a fair value of plan assets and projected benefit obligation of $930,000 and $850,000, respectively. The following information pertains to Year 7 for the plan:

• Plan contributions: $110,000
• Plan benefits paid: $95,000
• Service cost: $275,000
• Other Comprehensive Income Balances:
– Unrecognized prior service cost goes from $225,000 at the end of Year 6 to $210,000 at the end of Year 7
– Current prior service cost: $10,000
– Unrecognized pension gain goes from $85,000 at the end of Year 6 to $90,000 at the end of Year 7
– Current pension gain: $12,000
• Discount Rate: 8%
• Expected (and Actual) Return on Plan Assets: 9%
• Tax Rate: 30%

I got the calculations right but all the journal entries wrong.I tried going back to the book but it wasn’t any help. Like I need to know why you are crediting this instead of that.

 

 

[lauren.wilson14]

Also for anyone thinking about getting Becker, just don't. They used to be good but ever since they updated their review course, it has just gone downhill completely.

[Anonymous]

@Lauren – There was a time when I thought the same thing. I don't know how far along you are in your studies, but in my opinion the material (assuming it's a reputable company) is all a preference. In some cases it's helpful, in others it's not. Fact of the matter is, PLENTY of people have and will pass using Becker. To say it's no good isn't consistent with passing scores. Same can be said about Ninja, Gleim, Roger etc. I feel like there are people on this site who say “___________ did NOT prepare me for the sims” while showing a passing score in their sig.

Keep going, people have used Becker to pass…so can you.

[smurf]

Not responding to the question just filling in the parts you left out, cause I also need help with better learning the journal entries for Pensions. Here are the Calculations. If not a better website, maybe just an example of the T-Accounts used to figure these out (journal entries). The calculation I get because I also use Roger's CPA, but neither site is great at walking one through the journal entries required.

1. Calculate Net Periodic Pension Cost:

$277,300

Net Periodic Pension Cost = Service Cost of $275,000 + Interest Cost of $68,000 – Expected Return on Plan Assets of $83,700 + Amortization of Prior Service Cost of $25,000 – Amortization of Pension Gain of $7,000 = $277,300.

Interest Cost: Beginning PBO $850,000 × Discount Rate of 8% = $68,000

Expected Return on Plan Assets: Beginning FVPA $930,000 × Discount Rate of 9% = $83,700

Amortization of Prior Service Cost: Beginning Balance $225,000 + Current Prior Service Cost $10,000 – Ending Balance $210,000 = $25,000

Amortization of Pension Gain: Beginning Balance $85,000 +Current Pension Gain $12,000 – Ending Balance $90,000 = $7,000

2. Calculate the Fair Value of Plan Assets as of the end of Year 7:

$1,028,700

Fair Value of Plan Assets = Beginning FVPA $930,000 + Return on Plan Assets $83,700 + Contributions $110,000 – Benefits paid $95,000 = $1,028,700

3. Calculate the Projected Benefit Obligation as of the end of Year 7:

$1,096,000

Projected Benefit Obligation = Beginning PBO $850,000 + Service Cost $275,000 + Interest Cost $68,000 + Current period Prior Service Cost $10,000 – Current pension gain $12,000 – Benefits paid $95,000 = $1,096,000

4. Calculate the Funded Status as of the end of Year 7:

($67,300)

Funded Status: FVPA $1,028,700 – PBO $1,096,000 = ($67,300)

5. Provide the journal entries for each of the following events:

a. Contribution to the pension plan

Account Name Debit Credit
Pension Benefit Asset $110,000
Cash $110,000

b. Current Year Net Gain

Account Name Debit Credit
Pension Benefit Asset $12,000
Other Comprehensive Income $12,000

c. Current Year Prior Service Cost

Account Name Debit Credit
Other Comprehensive Income $10,000
Pension Benefit Asset $10,000

d. Service Cost

Account Name Debit Credit
Compensation Expense $275,000
Pension Benefit Asset $275,000

e. Interest Cost

Account Name Debit Credit
Net Periodic Pension Cost $68,000
Pension Benefit Asset $68,000

f. Return on Plan Assets

Account Name Debit Credit
Pension Benefit Asset $83,700
Net Periodic Pension Cost $83,700

g. Amortization of Prior Service Cost

Account Name Debit Credit
Net Periodic Pension Cost $25,000
Other Comprehensive Income $25,000

h. Amortization of Net Gain

Account Name Debit Credit
Other Comprehensive Income $7,000
Net Periodic Pension Cost $7,000

[Jimmy Dugan]

Look at the Becker Skillmaster video for that sim. They have an instructor walk you through every single sim in their test bank. There is more insight and detail in those videos than the written explanations.

[Author]

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