Question

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Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2018:

Prior service cost at Jan. 1, 2018, from plan amendment at the beginning of 2016 (amortization: $7 million per year)	$	52	million
Net loss–pensions at Jan.1, 2018 (previous losses exceeded previous gains)	$	65	million
Average remaining service life of the active employee group		10	years
Actuary’s discount rate		8	%

($ in millions)

	PBO				Plan Assets
Beginning of 2018	$	550		Beginning of 2018		$	400
Service cost		68		Return on plan assets,
Interest cost, 8%		44		7.5% (10% expected)			30
Loss (gain) on PBO		(3	)	Cash contributions			79
Less: Retiree benefits		(59	)	Less: Retiree benefits			(59	)
End of 2018	$	600		End of 2018		$	450

3. Prepare a pension spreadsheet to assist you in determining end of 2018 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Enter credit amounts with a minus sign and debit amounts with a positive sign.)
  

Required information

[The following information applies to the questions displayed below.]

Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2018:

Prior service cost at Jan. 1, 2018, from plan amendment at the beginning of 2016 (amortization: $7 million per year)	$	52	million
Net loss–pensions at Jan.1, 2018 (previous losses exceeded previous gains)	$	65	million
Average remaining service life of the active employee group		10	years
Actuary’s discount rate		8	%

($ in millions)

	PBO				Plan Assets
Beginning of 2018	$	550		Beginning of 2018		$	400
Service cost		68		Return on plan assets,
Interest cost, 8%		44		7.5% (10% expected)			30
Loss (gain) on PBO		(3	)	Cash contributions			79
Less: Retiree benefits		(59	)	Less: Retiree benefits			(59	)
End of 2018	$	600		End of 2018		$	450

3. Prepare a pension spreadsheet to assist you in determining end of 2018 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Enter credit amounts with a minus sign and debit amounts with a positive sign.)
  

Answer 1

Pension Worksheet- 2018
	Memo Record		General Journal Entries
($ in 000s)	PBO	Plan Assets	Prior Service Cost-AOCI	Net Loss-AOCI	Pension Expense	Cash	Net Pension (Liability) /Asset
Balance, Jan 1, 2018	$    (550)	$       400	$            52	$       65			$                      (150)
Service cost	$     (68)				$       68		$                        (68)
Interest cost, 8%	$     (44)				$       44		$                        (44)
Expected return on assets, 10%		$         40			$     (40)		$                         40
Adjust for:
Loss on assets		$       (10)		$       10			$                        (10)
Amortization
Prior Service Cost			$            (7)		$         7
Amortization
Net Loss				$       (1)	$         1		$                          -
Gain on PBO	$         3			$       (3)			$                           3
Prior Service Cost
Cash Funding		$         79				$     (79)	$                         79
Retiree Benefits	$       59	$       (59)					$                          -
Balance, Dec 31, 2018	$    (600)	$       450	$            45	$       71	$       80	$     (79)	$                      (150)
1. Computation of amount of loss to be amortized from OCI-loss Account in 2018:-
a. Net loss-AOCI at 01-01-2018			$               65
Projected Benefit Obligation as on 01-01-2018		$         550
Plan Assets as on 01-01-2018		$         400
Higher value		$         550
b. Corridor =10% of $560			$               55
c. Excess at the beginning of the year (a-b)			$10.00
d. Average remaining service period			10 years
e. loss amortized to 2018 pension expense (c/d)			$1.00

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