Question

1. The following is an incomplete pension spreadsheet for the current year for Desperado Corporation.

($ in millions) debit (credit)	PBO	Plan Assets	Prior Service Cost	Net (Gain) Loss	Pension Expense	Cash	Net Pension (Liability)/Asset
Beginning balance	(500)	250		58
Service cost					62
Interest cost
Expected return on assets					(23)
(Gain)/loss on assets				(2)
Amortization of:
Prior service cost			(6)
Net (gain)/loss
Loss on PBO	(26)			26
Contributions to fund						(56)
Retiree benefits paid	43	(43)	_____	_____	_____	_____	_____
Ending balance	(575)	288	54	79	_____	_____	(287)

Required:

1) Complete the pension spreadsheet.

2) Prepare the journal entry to record pension expense for the year.

Answer 1

1. Pension Spreadsheet:

$ in millions)	PBO	Plan	Prior	Net	Pension	Cash	Net Pension (Liability)/Asset
debit (credit)		Assets	Service Cost	(Gain) Loss	Expense
Beginning balance	(500)	250	60	58			(250)
Service cost	(62)				62		(62)
Interest cost	(30)				30		(30)
Expected return on assets		23			(23)		23
(Gain)/loss on assets		2		(2)			2
Amortization of:
Prior service cost			(6)		6
Net (gain)/loss				(3)	3
Loss on PBO	(26)			26			(26)
Contributions to fund		56				(56)	56
Retiree benefits paid	43	(43)
Ending balance	(575)	288	54	79	78	(56)	(287)

2. Journal Entry:

Particulars	Debit	Credit
Pension Expense	78	-
Plan assets	23	-
PBO (62+30)	-	92
Amortization of prior service cost - OCI	-	6
Amortization of net loss - OCI	-	3
(Entry to record pension expense)