The Lane Company was incorporated in 1998. Because it had become successful, the company established a defined benefit pension plan for its employees on January 1, 2007. Due to the loyalty of its employees, the company granted retroactive benefits to them. These retroactive benefits resulted in $1,240,000 of unrecognized prior service cost on that date. The company decided to amortize these costs using the years-of-future-service method. The company's actuary and funding agency have provided the following additional information for 2007 and 2008:

The company contributed $690,000 and $650,000 to the pension fund at the end of 2007 and 2008, respectively. No retirement benefits were paid in 2007. There are no other components of Lane Company's pension expense; ignore any additional pension liability. The company rounds its calculations to the nearest dollar.
Required
1. Compute the amount of Lane Company's pension expense for 2007 and 2008.
2. Prepare the December 31 journal entry to record the pension expense for 2007 and 2008.
3. What is the total prepaid/accrued pension cost at the end of 2008? Is it an asset or a liability?
4. Prepare a schedule that reconciles the beginning and ending amounts of the projected benefit obligation for2007.

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2007 2008 Expected long-term (and actual) rate of return on plan assets Amortization fraction for unrecognized prior service cost Discount rate Plan assets (1/1) 48/620 9% $ -0 1,240,000 463,000 9% 46/620 900 690,000 1,814,600 475,000 Projected benetit obligation (/I) Service cost Due to the unrecognized prior service cost