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ACC - Noel Zoeller is the newly hired assistant controller of Kemp Industries




Question;Noel Zoeller is the newly hired assistant controller of Kemp Industries, a regional supplier of hardwoodderivative products. The company sponsors a defined benefit pension plan that covers its 420 employees. On reviewing last year?s financial statements, Zoeller was concerned about some items reported in the disclosure notes relating to the pension plan. Portions of the relevant note follow:Kemp?s comparative income statements reported net periodic pension expense of $108,000 in 2013 and $86,520 in 2012. Since employment has remained fairly constant in recent years, Zoeller expressed concern over the increase in the pension expense. He expressed his concern to you, a three?year senior accountant at Kemp. ?I?m also interested in the differences in these liability measurements,? he mentioned. Required:Write a memo to Zoeller. Use the rubric on the following page as a guideline. Be sure to use the FASBcodification to substantiate your information (cite it even if you don?t quote it). In the memo:1. Explain to Zoeller how the composition of the net periodic pension expense can create the situation he sees. Briefly describe the components of pension expense.2. Briefly explain how pension gains and losses are recognized in earnings.3. Describe for him the differences and similarities between the accumulated benefit obligation and theprojected benefit obligation.4. Explain how the ?Projected benefit obligation in excess of plan assets? is reported in the financialstatements.


Paper#40928 | Written in 18-Jul-2015

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