On January 1, 2007 the Parkway Company adopted a defined benefit pension plan. At that time, the company awarded retroactive benefits to its employees, resulting in an unrecognized prior service cost of $2,180,000 on that date. The company decided to amortize these costs by the straight-line method over the 16-year average remaining service life of its active participating employees. The company's actuary and funding agency have also provided the following additional information for 2007 and 2008:

The company contributed $670,000 and $700,000 to the pension fund at the end of 2007 and 2008, respectively. There are no other components of Parkway Company's pension expense; ignore any additional pension liability.
Required
1. Compute the amount of Parkway Company's pension expense for 2007 and 2008.
2. Prepare the December 31 journal entry to record the pension expense for 2007 and 2008.
3. What is the total prepaid/accrued pension cost at the end of 2008? Is it an asset or aliability?

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2007 340,000 2008 Service cost Projected benefit obligation (1/1) Plan assets (1/1) Discount rate Expected long-term (and actual) rate of return on plan assets S 348,000 2,180,000 $2,738,000 670,000 1090 10% 9% Due to the unrecognized prior service cost