Question
Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2018, Lacy received the following information: Projected Benefit Obligation ($ in millions) Balance,
Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2018, Lacy received the following information:
Projected Benefit Obligation | ($ in millions) | ||||
Balance, January 1 | $ | 560 | |||
Service cost | 80 | ||||
Prior service cost | 32 | ||||
Interest cost(5.0%) | 28 | ||||
Benefits paid | (87 | ) | |||
Balance, December 31 | $ | 613 | |||
Plan Assets | ($ in millions) | ||||
Balance, January 1 | $ | 430 | |||
Actual return on plan assets | 45 | ||||
Contributions 2018 | 80 | ||||
Benefits paid | (87 | ) | |||
Balance, December 31 | $ | 468 | |||
The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2018. At the end of 2018, Lacy amended the pension formula creating a prior service cost of $32 million. Required: 1. Determine Lacy's pension expense for 2018. 2. Prepare the journal entry(s) to record Lacys pension expense, gains or losses, prior service cost, funding, and payment of retiree benefits for 2018.
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