American Metals, Inc. has a defined benefit pension plan. Characteristics of the plan during 2018 follow...
American Metals, Inc. has a defined benefit pension plan. Characteristics of the plan during 2018 follow (in $-millions):
|
PBO balance, January 1 |
480 |
|
Plan assets balance, January 1 |
300 |
|
Service cost |
75 |
|
Interest cost |
45 |
|
Gain from change in actuarial assumption |
22 |
|
Benefits paid |
(36) |
|
Actual return on plan assets |
20 |
|
2018 contributions |
60 |
The expected long-term rate of return on plan assets was 8%. There were no AOCI balances related to pensions on January 1, 2018, but at the end of 2018 the company amended the pension formula, creating a prior service cost of $12 million.
Required:
- Calculate pension expense for 2018.
- Prepare the journal entries to record pension expense, gains or losses, prior service cost, funding, and payment of benefits for 2018.
- What amount will American Metals, Inc. report in its 2018 balance sheet as a net pension asset or liability?
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American Metals, Inc. has a defined benefit pension plan.
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