Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable
Question:
Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2021:
Prior service cost at Jan. 1, 2021, from plan amendment at the
beginning of 2019 (amortization: $5 million per year)$34millionNet loss-pensions at Jan.1, 2021 (previous losses exceeded previous gains)$55millionAverage remaining service life of the active employee group10yearsActuary's discount rate8%
($ in millions)
PBOPlan
AssetsBeginningof 2021$350Beginningof 2021$200Service cost47Return on plan assets,Interest cost, 8%287.0% (10% expected)14Loss (gain) on PBO(2)Cash contributions59Less: Retiree benefits(23)Less: Retiree benefits(23)End of 2021$400End of 2021$250
Assume the following actuary and trustee reports indicating changes in the PBO and plan assets of Lakeside Cable during 2022:
($ in millions)
PBOPlan
AssetsBeginningof 2022$400Beginningof 2022$250Service cost40Return on plan assets,Interest cost, 8%3212% (10% expected)30Loss (gain) on PBO5Cash contributions32Less: Retiree benefits(18)Less: Retiree benefits(18)Endof 2022$459Endof 2022$294
Problem 17-16 (Algo) Part 1
Required:
1-a.Determine Lakeside's pension expense for 2021.
1-b.Prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets and payment of benefits to retirees.