Question

Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2018: Prior service costat Jan. 1. 2018, from plan amendment at the beginning of 2015 (amortization$8 million per year) Net loss-AOCI at Jan.1, 2018 (previous losses exceeded previous gains) Average remaining service life of the active employee group Actuary's discount rate $ 40 million $118 million 10 years 5 ($ in millions) Pво Beginning of 2018 Service cost Plan Assets $ 660 76 39.6 Interest cost, 58 Loss (gain) on PBO Less: Retiree benefits End of 2018 $ 860 Beginning of 2018 Return on plan assets, 68 (89 expected) 43.0 (22) Cash contributions (43) Less: Retiree benefits $914.0 End of 2018 109 (63) $765.6 Required: 1-a. Determine Douglas Roberts' pension expense for 2018, 1.b, 2. to 4. Prepare the appropriate journal entries to record the pension expense, to record any 2018 gains and losses, to record the cash contribution to plan assets and to record retiree benefits. Complete this question by entering your answers in the tabs below.

Answer 1

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Solution: Answers is highlighted in yellow: Pension Expense Service Cost Interest Cost Expected Return on Assets (660*8%) Amortization of Prior sevice cost Amortization of net Loss (118-86)/10 $ $ $ $ $ 76.0 43.0 52.8 8.0 3.2 1) Pension Expense $ 77.4 1.b) Credit $ $ Debit 77.4 52.8 $ $ $ 3.2 8.0 119.0 $ 13.2 Naming convention is not available, can be slightly different: Jounal entries Event Account title and explanation Pension expense Plan assets (Expected return on assets) Amortization of net loss-OCI Amortization of prior service cost-Oci PBO (76+43) (To record the pension expense) LOSS - OCI (660*8%) - (660*6%) Plan assets (To record the gain or loss on assets) PBO (given) Gain - OCI (To record the change in PBO) Plan assets Cash (To record the funding) PBO Plan assets (To record the retiree benefits) $ 13.2 $ 22.01 $ 22.0 $ 109.0 $ 109.0 $ 43.0 $ 43.0