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Exercise 17-19 (Algo) Record pension expense, funding, and gains and losses; financial statement effects [LO17-6, 17-7, 17-8] Beale Management has a noncontributory, defined benefit pension
Exercise 17-19 (Algo) Record pension expense, funding, and gains and losses; financial statement effects [LO17-6, 17-7, 17-8]
Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2024 (the end of Beale's fiscal year), the following pension-related data were available:
Projected Benefit Obligation | ($ in millions) |
---|---|
Balance, January 1, 2024 | $ 400 |
Service cost | 42 |
Interest cost, discount rate, 5% | 20 |
Gain due to changes in actuarial assumptions in 2024 | (11) |
Pension benefits paid | (20) |
Balance, December 31, 2024 | $ 431 |
Plan Assets | ($ in millions) |
---|---|
Balance, January 1, 2024 | $ 420 |
Actual return on plan assets | 30 |
(Expected return on plan assets, $35) | |
Cash contributions | 71 |
Pension benefits paid | (20) |
Balance, December 31, 2024 | $ 501 |
January 1, 2024, balances: | ($ in millions) |
---|---|
Pension asset | $ 20 |
Prior service costAOCI (amortization $4 per year) | 28 |
Net gainAOCI (any amortization over 10 years) | 82 |
Required:
1. to 3. Prepare the journal entries required for the pension during 2024.
4. Determine the balances at December 31, 2024, in the net gainAOCI, and prior service costAOCI. [Hint: You might find T-accounts useful.]
5. What amount will Beale report in its 2024 balance sheet as a net pension asset or net pension liability for the funded status of the plan?
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