Question
Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2024 are as follows: ($ millions) PBO balance, January 1 $490 Plan
Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2024 are as follows:
($ millions) | ||
---|---|---|
PBO balance, January 1 | $490 | |
Plan assets balance, January 1 | 400 | |
Service cost | 80 | |
Interest cost | 50 | |
Gain from change in actuarial assumption | 28 | |
Benefits paid | (38) | |
Actual return on plan assets | 34 | |
Contributions 2024 | 70 |
The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2024, but at the end of 2024, the company amended the pension formula, creating a prior service cost of $14 million.
Required:
- Calculate the pension expense for 2024.
- Prepare the journal entries to record (a) pension expense, (b) gains or losses, (c) prior service cost, (d) funding, and (e) payment of benefits for 2024.
Record the pension expense.
Record gain or loss on PBO.
Record gain or loss on plan assets.
Record the prior service cost.
Record the funding.
Record the payment of benefits.
3. What amount will Electronic Distribution report in its 2024 balance sheet as a net pension asset or net pension liability?
\begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Pension Expense } \\ \hline Service cost & \\ \hline Interest cost & \\ \hline Expected return on plan assets & \\ \hline Amortization of prior service cost & \\ \hline Amortization of net gain or net loss-AOCI & \\ \hline Pension expense & $ \\ \hline \end{tabular}Step by Step Solution
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