Question
Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2016, Lacy received the following information: Projected Benefit Obligation ($ in millions) Balance,
Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2016, Lacy received the following information: |
Projected Benefit Obligation | ($ in millions) | ||
Balance, January 1 | $ | 360 | |
Service cost | 60 | ||
Prior service cost | 12 | ||
Interest cost(7.5%) | 27 | ||
Benefits paid | (37 | ) | |
Balance, December 31 | $ | 422 | |
Plan Assets | ($ in millions) | ||
Balance, January 1 | $ | 240 | |
Actual return on plan assets | 27 | ||
Contributions 2016 | 60 | ||
Benefits paid | (37 | ) | |
Balance, December 31 | $ | 290 | |
The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2016. At the end of 2016, Lacy amended the pension formula creating a prior service cost of $12 million. |
Required: |
1. | Determine Lacy's pension expense for 2016. Pension Expense : |
2. | Prepare the journal entry(s) to record Lacys pension expense, gains or losses, prior service cost, funding, and payment of retiree benefits for 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions. (i.e., 10,000,000 should be entered as 10).) |
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