I. Actuary and trustee reports indicate the following changes in the PBO and plan assets of Broncos Sports Inc during 20x1:

Prior service cost at Jan. 1, 20x1, from plan amendment at the beginning of 20x0 (amortization: $2 million per year)	$14 million
Net loss-AOCI at Jan.1, 20x1 (previous losses exceeded previous gains)	$40 million
Average remaining service life of the active employee group	10 years
Actuary's discount rate	7%

($ in millions)	PBO			PLAN ASSETS
Beginning of 20x1	$300		Beginning of 201x1	$200
Service cost	40		Return on plan assets, 8% (10% expected)	16
Interest cost, 7%	21
Loss (gain) on PBO	(7)		Cash contributions	45
Less: Retiree benefits	(19)		Less: Retiree benefits	(19)
End of 20x1	$335		End of 20x1	$242

Required:

1) Determine Broncos' pension expense for 20x1 and prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets.

2) Prepare the appropriate journal entries to record any 20x1 gains and losses.

II. For the year ended December 31, 20x1, Fedro Engineering reported pretax accounting income of $957,000. Selected information for 20x1 from Fedros records follows:

Interest income on municipal bonds $12,000

Depreciation claimed on the 20x1 tax return

in excess of depreciation on the income statement 50,000

Warranty expense reported on the income statement 25,000

Actual warranty expenditures in 20x1 18,000

Fedros income tax rate is 40%.

1) Determine the amounts necessary to record income taxes for 20x1, and prepare the appropriate journal entry.

2) What is Fedros 20x1 net income?