In: Accounting
. A partially completed pension spreadsheet showing the relationships among the elements that constitute Carney, Inc.’s defined benefit pension plan follows. At the end of 2018, Carney revised its pension formula and incurred a prior service cost of $100 million. At the end of 2019, the pension formula was amended again, creating an additional prior service cost of $200 million. At the beginning of 2020, $400 million prior service cost was incurred. At the beginning of 2021, $300 million prior service cost was incurred. In 2018 - 2021, the actuary’s discount rate remained 10%, and the average remaining service life of the active employee group remained 10 years. The expected rate of return on assets was 10% in 2019, and increased by 1% each year.
2019 Pension spreadsheet ($ in millions) |
(PBO) |
Plan Assets |
Prior Service Cost–AOCI |
Net Loss (Gain) –AOCI |
Pension Expense |
Cash |
Net Pension (Liability) / Asset |
Balance, Jan. 1, 2019 |
(25,000) |
20,000 |
100 |
4,500 |
(5,000) |
||
Service cost |
(800) |
||||||
Interest cost |
|||||||
Prior Service Cost |
|||||||
Expected return on assets |
|||||||
Adjust for: Gain (loss) on assets |
|||||||
Amortization of: "Prior service cost-AOCI" |
|||||||
Amortization of: "Net Loss (Gain)-AOCI" |
|||||||
Gain (Loss) on PBO |
7000 |
||||||
Cash funding |
(1,000) |
||||||
Retiree benefits |
950 |
||||||
Bal., Dec. 31, 2019 |
22,450 |
290 |
(3,100) |
1,510 |