Problem 17-16 (Static) Comprehensivereporting a pension plan; pension spreadsheet; determine changes in balances; two years [LO17-3, 17-4, 17-5, 17-6, 17-7, 17-8]

Skip to question

[The following information applies to the questions displayed below.] Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2021:

Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2019 (amortization: $4 million per year)	$	32	million
Net loss-pensions at Jan.1, 2021 (previous losses exceeded previous gains)	$	40	million
Average remaining service life of the active employee group		10	years
Actuarys discount rate		8	%

($ in millions)

	PBO				Plan Assets
Beginning of 2021	$	300		Beginning of 2021		$	200
Service cost		48
Interest cost, 8%		24		Return on plan assets, 7.5% (10% expected)			15
Loss (gain) on PBO		(2	)	Cash contributions			45
Less: Retiree benefits		(20	)	Less: Retiree benefits			(20	)
End of 2021	$	350		End of 2021		$	240

Assume the following actuary and trustee reports indicating changes in the PBO and plan assets of Lakeside Cable during 2022: ($ in millions)

	PBO				Plan Assets
Beginning of 2022	$	350		Beginning of 2022		$	240
Service cost		38
Interest cost at 8%		28		Return on plan assets, 15% (10% expected)			36
Loss (gain) on PBO		5		Cash contributions			30
Less: Retiree benefits		(16	)	Less: Retiree benefits			(16	)
End of 2022	$	405		End of 2022		$	290

Problem 17-16 (Static) Part 3

3. Prepare a pension spreadsheet to assist you in determining end of 2021 balances in the PBO, plan assets, prior service costAOCI, the net lossAOCI, and the pension liability. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Enter credit amounts with a minus sign and debit amounts with a positive sign.)

4-a. Determine Lakesides pension expense for 2022. 4-b. Prepare the appropriate journal entries to record the expense, the cash funding of plan assets, and payment of benefits to retirees.