Question

Required information Problem 17-16 Comprehensive-reporting a pension plan; pension spreadsheet; determine changes in balances; two years [LO17-3, 17-4, 17-5, 17-6, 17-7, 17-8] [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 2018: Prior service cost at Jan. 1, 2018, from plan amendment at the beginning of 2016 (amortization: $6 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 $42 million $ 60 million 10 years 8% ($ in millions) PBO Plan Assets $ 200 15 Beginning of 2018 Service cost Interest cost, 8% Loss (gain) on PBO Less: Retiree benefits End of 2018 $400 Beginning of 2018 58 Return on plan assets, 32 7.5% (10% expected) (3) Cash contributions (37) Less: Retiree benefits $450 End of 2018 72 (37) $250

Answer 1

	PBO	Plan Assets	Prior service cost - AOCI	Net loss - AOCI	Pension expense	Cash	Net pension (liability)/Asset
Bal., Jan. 1, 2018	(400)	200	42	60			(200)
Service cost	(58)				58		(58)
Interest cost, 8%	(32)				32		(32)
Expected return on assets		20			(20)		20
Loss on assets		(5)		5			(5)
Amortization of:
Prior service cost – AOCI			(6)		6
Net loss – AOCI				(2)	2
Gain on PBO	3			(3)			3
Cash contributions		72				(72)	72
Retiree benefits	37	(37)
Bal., Dec. 31, 2018	(450)	250	36	60	78		(200)

400*8% = 32

200*10% = 20

Loss on assets = 20-15=5

Net loss – AOCI = (60-40)/10 years = 2

Corridor = 10% of greater of PBO or plan assets