Question

Problem 17-16 (Static) Comprehensive—reporting a pension plan; pension spreadsheet; determine changes in balances; two years [LO17-3, 17-4, 17-5, 17-6, 17-7, 17-8]

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Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2021:

Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2019 (amortization: $4 million per year)	$	32	million
Net loss-pensions at Jan.1, 2021 (previous losses exceeded previous gains)	$	40	million
Average remaining service life of the active employee group		10	years
Actuary’s discount rate		8	%

($ in millions)

	PBO				Plan Assets
Beginning of 2021	$	300		Beginning of 2021		$	200
Service cost		48
Interest cost, 8%		24		Return on plan assets, 7.5% (10% expected)			15
Loss (gain) on PBO		(2	)	Cash contributions			45
Less: Retiree benefits		(20	)	Less: Retiree benefits			(20	)
End of 2021	$	350		End of 2021		$	240

Assume the following actuary and trustee reports indicating changes in the PBO and plan assets of Lakeside Cable during 2022:

($ in millions)

	PBO				Plan Assets
Beginning of 2022	$	350		Beginning of 2022		$	240
Service cost		38
Interest cost at 8%		28		Return on plan assets, 15% (10% expected)			36
Loss (gain) on PBO		5		Cash contributions			30
Less: Retiree benefits		(16	)	Less: Retiree benefits			(16	)
End of 2022	$	405		End of 2022		$	290

Problem 17-16 (Static) Part 5

5. Determine the new gains and/or losses in 2022, and prepare the appropriate journal entry(s) to record them. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Using T-accounts, determine the balances at December 31, 2022, in the net loss—AOCI and prior service cost—AOCI. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Prepare a pension spreadsheet to assist you in determining end of 2022 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Enter credit amounts with a minus sign and debit amounts with a positive sign.)

Answer 1

Requirement 5

To record gains and losses

($ in millions)

Loss—OCI ($5 loss on change of PBO assumption) 5

PBO............................................................... 5

Plan assets........................................................... 12
Gain—OCI ($36 actual return on assets exceeds $24 gain expected) 12

Requirement 6

Requirement 7