Question

Prepare a pension spreadsheet to assist you in determining end of 2018 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability.

Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2018: Prior service cost at Jan. 1, 2018, from plan amendment at the beginning of 2016 (amortization: $7 million per year) Net loss-pensions at Jan.1, 2018 (previous losses exceeded previous gains) Average remaining service life of the active employee group Actuary’s discount rate $49 million $67 million 10 years 10% ($ in millions) PBO Plan Assets $350 Beginning of 2018 Service cost Interest cost, 10% Loss (gain) on PBO Less: Retiree benefits End of 2018 $470 62 47 (3) (56) $520 Beginning of 2018 Return on plan assets, 8.0% (10% expected) Cash contributions Less: Retiree benefits End of 2018 28 78 (56) $420

Answer 1

Pension Worksheet- 2018
	Memo Record		General Journal Entries
($ in 000s)	PBO	Plan Assets	Prior Service Cost-AOCI	Net Loss-AOCI	Pension Expense	Cash	Net Pension (Liability) /Asset
Balance, Jan 1, 2018	$             (470)	$         350	$            49	$              67			$                      (120)
Service cost	$              (62)				$       62		$                        (62)
Interest cost, 10%	$              (47)				$       47		$                        (47)
Expected return on assets, 10%		$           35			$      (35)		$                         35
Loss on assets (35-28)		$           (7)		$               7			$                          (7)
Amortization of:
Prior Service Cost-AOCI			$            (7)		$         7
Net Loss-AOCI				$              (2)	$         2		$                          -
Gain on PBO	$                  3			$              (3)			$                           3
Cash Contributions		$           78				$        (78)	$                         78
Retiree Benefits	$                56	$          (56)					$                          -
Balance, Dec 31, 2018	$             (520)	$         400	$            42	$              69	$       83	$        (78)	$                      (120)

1. Computation of amount of loss to be amortized from OCI-loss Account in 2018:-
a. Net loss-AOCI at 01-01-2018			$               67
Projected Benefit Obligation as on 01-01-2018		$            470
Plan Assets as on 01-01-2018		$            350
Higher value		$            470
b. Corridor =10% of $560			$               47
c. Excess at the beginning of the year (a-b)			$20.00
d. Average remaining service period			10 years
e. loss amortized to 2018 pension expense (c/d)			$2.00

Journal entry
Account Titles and Explanation	Debit	Credit
Pension Expense	$                83
OCI - loss	$                  2
Cash		$           78
OCI-PSC		$             7
(To record pension expense)

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Thank you.