Question

Ray Inc. sponsors a defined benefit pension plan for its employees. At January 1, 2018, Ray Inc. has unrecognized prior service cost of $24 million (amortized $4 per year) and net gains in AOCI of $30 million (amortized over 10 years). Ray Inc. reported Net Pension Asset of $10 million on its balance sheet as of December 31, 2017. Additional information for Ray’s pension plan follows (the fiscal year ends in December):

(in $ millions)	12/31/2017	12/31/2018
Projected benefit obligation	240	273
Plan assets (at fair value)	?	270
(in $ millions)	During 2017	During 2018
Service cost	50	41
Interest cost, (discount rate 5%)	?	?
Expected rate of return, 10%	?	?
Actual return on plan assets	?	20
Annual contributions	0	20
Benefits paid to retirees	30	20

Record the journal entry for pension expense for 2018. Write step by step

Record the journal entry for gain or losses in PBO for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for gain or losses in plan assets for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for cash contribution to plan assets for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for benefits paid to employees for 2018 if necessary. Write no entry if unnecessary.

What is the balance of Net gain–AOCI at December 31, 2018 and what will be the “amortization of net gain–OCI” amount in 2019?

Please explain step by step.

Answer 1