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 $ 480 Service cost 50 Interest cost, discount rate, 5% 24 Gain due to changes in actuarial assumptions in 2021 (8 ) Pension benefits paid (24 ) Balance, December 31, 2021 $ 522 Plan Assets ($ in millions) Balance, January 1, 2021 $ 500 Actual return on plan assets 34 (Expected return on plan assets, $39) Cash contributions 75 Pension benefits paid (24 ) Balance, December 31, 2021 $ 585 January 1, 2021, balances: ($ in millions) Pension asset $ 20 Prior service cost—AOCI (amortization $6 per year) 42 Net gain—AOCI (any amortization over 10 years) 90 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?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 4E

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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		$	480
Service cost			50
Interest cost, discount rate, 5%			24
Gain due to changes in actuarial assumptions in 2021			(8	)
Pension benefits paid			(24	)
Balance, December 31, 2021		$	522

Plan Assets	($ in millions)
Balance, January 1, 2021		$	500
Actual return on plan assets			34
(Expected return on plan assets, $39)
Cash contributions			75
Pension benefits paid			(24	)
Balance, December 31, 2021		$	585

January 1, 2021, balances:	($ in millions)
Pension asset	$	20
Prior service cost—AOCI (amortization $6 per year)		42
Net gain—AOCI (any amortization over 10 years)		90

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?

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