Question

Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2021 (the end of Beale's fiscal year), the following pension-related data were available:

Projected Benefit Obligation	($ in millions)
Balance, January 1, 2021		$	760
Service cost			78
Interest cost, discount rate, 5%			38
Gain due to changes in actuarial assumptions in 2021			(22)
Pension benefits paid			(38)
Balance, December 31, 2021		$	816

Plan Assets	($ in millions)
Balance, January 1, 2021		$	780
Actual return on plan assets			48
(Expected return on plan assets, $53)
Cash contributions			89
Pension benefits paid			(38)
Balance, December 31, 2021		$	879

January 1, 2021, balances:	($ in millions)
Pension asset	$	20
Prior service cost—AOCI (amortization $8 per year)		40
Net gain—AOCI (any amortization over 10 years)		118

  
Required:
1. to 3. Prepare the 2021 journal entries to record pension expense, to record any 2021 gains and losses and the contribution to plan assets and benefit payments to retirees.
4. Determine the balances at December 31, 2021, in the PBO, plan assets, the net gain—AOCI, and prior service cost—AOCI [Hint: You might find T-accounts useful.]
5. What amount will Beale report in its 2021 balance sheet as a net pension asset or net pension liability for the funded status of the plan?

Answer 1