Question

Problem 1: Comprehensive exercise on defined benefit pension plans (46 pts). Orpheum Productions has a defined benefit pension plan. On December 31, 2018 (the end of Orpheum's fiscal year), the following pension-related data were available: ($ in millions) $240 41 12 (20) $268. Projected Benefit Obligation Balance, January 1, 2018 Service cost Interest cost, discount rate, 5% Gain due to changes in actuarial assumptions in 2018 Pension benefits paid Balance, December 31, 2018 Plan Assets Balance, January 1, 2018 Actual return on plan assets (Expected return on plan assets, $22.5) Cash contributions Pension benefits paid Balance, December 31, 2018 January 1, 2018, balances: Prior service cost-AOCI (amortization $4 per year) Net gain-AOCI (any amortization over 15 years) $250 20 35 (20) $285 $24 40 Required: a. Calculate the amount of net gain-AOCI amortization in 2018, if any (4 pts). PBO$240m 2 Plan assers 250m

Please help with parts B, C (especially this one), and D. Thank you.

Orpheum Productions has a defined benefit pension plan. ON December 31, 2018 (the end of Orpheum's fiscal year), the following pension-related data were available:

Answer 1

Part A

Computation of net gain amortization:

Net gain—AOCI (previous gains exceeded previous losses)	40
10% of $250 plan assets (greater than $240 PBO)	(25)
Amount to be amortized	15
	15 years
Amortization	1

Part B

Pension expense:

Service cost	41
Interest cost	12
Expected return on the plan assets ($20 actual, plus $2.5 loss)	(22.5)
Amortization of prior service cost	4
Amortization of net gain	(1)
Pension expense	33.5

($ in millions)	PBO	Plan Assets	Prior Service Cost–AOCI	Net Loss­AOCI	Pension Expense	Cash	Net Pension (Liability) /Asset
Balance, Jan. 1, 2018	(240)	250	24	40			10
Service cost	(41)				41		(41)
Interest cost	(12)				12		(12)
Expected return on assets		22.5			(22.5)		22.5
Adjust for:
Loss on assets		(2.5)		2.5			(2.5)
Amortization of:
Prior service cost			(4)		4
Net gain				1	(1)
Gain/Loss on PBO	5			(5)			5
Cash funding		35				(35)	35
Retiree benefits	20	(20)
Bal., Dec. 31, 2018	(268)	285	20	38.5	33.5	(35)	17

Part C

Event	General journal	Debit	Credit
1	Pension expense	33.5
	Plan assets	22.5
	Amortization of net gain—OCI	1
	Amortization of prior service cost—OCI		4
	PBO (41+12)		53
2	PBO	5
	Gain—OCI		5
3	Loss—OCI	2.5
	Plan assets		2.5
4	Plan assets	35
	Cash		35
5	PBO	20
	Plan assets		20

Part D

AOCI – prior service cost = $20

AOCI – net gain = $41.5

ACCUMULATED OTHER COMPREHENSIVE INCOME Net Gain—AOCI

		40	Jan. 1 balance
		5	New gain
New loss	2.5
Amortized in 2018	1
		41.5	Dec. 31 balance

Prior Service Cost—AOCI

Jan. 1 balance	24
		4	Amortized in 2018
Dec. 31 balance	20