Question
Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2021 are as follows: ($ millions) PBO balance, January 1 $ 530
Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2021 are as follows: ($ millions) PBO balance, January 1 $ 530 Plan assets balance, January 1 300 Service cost 50 Interest cost 30 Gain from change in actuarial assumption 36 Benefits paid (46 ) Actual return on plan assets 23 Contributions 2021 40 The expected long-term rate of return on plan assets was 9%. There were no AOCI balances related to pensions on January 1, 2021, but at the end of 2021, the company amended the pension formula, creating a prior service cost of $18 million. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Required:
2. Prepare the journal entries to record
(a) pension expense,
(b) record gain or loss on PBO
(c) Record gain or loss on plan assets.
(d) Record the prior service cost.
(e) Record the funding.
(e) Payment of benefits for 2021.
3. What amount will Electronic Distribution report in its 2021 balance sheet as a net pension asset or net pension liability?
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