Question

Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2021 (the end of Beale's fiscal year), the following pension-related data were available:

Projected Benefit Obligation	($ in millions)
Balance, January 1, 2021		$	780
Service cost			80
Interest cost, discount rate, 5%			39
Gain due to changes in actuarial assumptions in 2021			(23	)
Pension benefits paid			(39	)
Balance, December 31, 2021		$	837

Plan Assets	($ in millions)
Balance, January 1, 2021		$	820
Actual return on plan assets			49
(Expected return on plan assets, $54)
Cash contributions			90
Pension benefits paid			(39	)
Balance, December 31, 2021		$	920

January 1, 2021, balances:	($ in millions)
Pension asset	$	40
Prior service cost—AOCI (amortization $9 per year)		45
Net gain—AOCI (any amortization over 10 years)		142

Required:
Prepare a pension spreadsheet to show the relationship among the PBO, plan assets, prior service cost, the net gain, pension expense, and the net pension asset. (Enter credit amounts with a minus sign and debit amounts with a positive sign. Enter your answers in millions.)

	Prior Net Pension Plan Service Net Pension (Liability) / ($ in millions) PBO Assets Cost-AOCI Gain-AOCI Expense Cash Asset Balance, Jan. 1, 2021 $2 Service cost Interest cost, 5% Expected return on assets Adjust for: Loss on assets Amortization of: Prior service cost Net gain Gain on PBO Cash funding Retiree benefits Balance, Dec. 31, 2021 $0 $0 $2 $0 $0 $0

Answer 1

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Sign of amounts can be +/- Solution: Net Pension (Liability) Asset 401 Prior Plan Service Net Gain - Pension Assets cost - AOCI AOCI Expense 820 45 - 142 50 PBO Cash -780 -50 -50 -39 39 -39 54 -54 54 5 -5 Balance, Jan 1, 2021 Service cost Interest Cost Expected return on assets Adjust for: Loss on Assets (49-54) Amortization: Prior service cost Net Gain (142-82)/10 Gain on PBO Cash funding Retiree benefits Balance, Dec 31, 2021 -9 9 -6 23 -23 23 90 -90 90 39 -39 0 113 -807 920 36 - 154 38