Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2021: Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018 (amortization: $4 million per year) $ 28 million Net loss—AOCI at Jan. 1, 2021 (previous losses exceeded previous gains) $ 80 million Average remaining service life of the active employee group 10 years Actuary's discount rate 7 % ($ in millions) Plan PBO Assets Beginning of 2021 $ 600 Beginning of 2021 $ 400 Service cost 80 Return on plan assets, 8% (10% expected) 32 Interest cost, 7% 42 Loss (gain) on PBO (14 ) Cash contributions 90 Less: Retiree benefits (38 ) Less: Retiree benefits (38 ) End of 2021 $ 670 End of 2021 $ 484 Required: 1-a. Determine Douglas-Roberts's pension expense for 2021. 1-b, 2. to 4. Prepare the appropriate journal entries to record the pension expense, to record any 2021 gains and losses, to record the cash contribution to plan assets and to record retiree benefits.
Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2021: Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018 (amortization: $4 million per year) $ 28 million Net loss—AOCI at Jan. 1, 2021 (previous losses exceeded previous gains) $ 80 million Average remaining service life of the active employee group 10 years Actuary's discount rate 7 % ($ in millions) Plan PBO Assets Beginning of 2021 $ 600 Beginning of 2021 $ 400 Service cost 80 Return on plan assets, 8% (10% expected) 32 Interest cost, 7% 42 Loss (gain) on PBO (14 ) Cash contributions 90 Less: Retiree benefits (38 ) Less: Retiree benefits (38 ) End of 2021 $ 670 End of 2021 $ 484 Required: 1-a. Determine Douglas-Roberts's pension expense for 2021. 1-b, 2. to 4. Prepare the appropriate journal entries to record the pension expense, to record any 2021 gains and losses, to record the cash contribution to plan assets and to record retiree benefits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2021:
| Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018 (amortization: $4 million per year) | $ | 28 | million |
| Net loss—AOCI at Jan. 1, 2021 (previous losses exceeded previous gains) | $ | 80 | million |
| Average remaining service life of the active employee group | 10 | years | |
| Actuary's discount rate | 7 | % | |
| ($ in millions) | Plan | |||||||||
| PBO | Assets | |||||||||
| Beginning of 2021 | $ | 600 | Beginning of 2021 | $ | 400 | |||||
| Service cost | 80 | Return on plan assets, | ||||||||
| 8% (10% expected) | 32 | |||||||||
| Interest cost, 7% | 42 | |||||||||
| Loss (gain) on PBO | (14 | ) | Cash contributions | 90 | ||||||
| Less: Retiree benefits | (38 | ) | Less: Retiree benefits | (38 | ) | |||||
| End of 2021 | $ | 670 | End of 2021 | $ | 484 | |||||
Required:
1-a. Determine Douglas-Roberts's pension expense for 2021.
1-b, 2. to 4. Prepare the appropriate
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