Actuary and trustee reports indicate the following changes in the PBO and plan assets of Mahomes Industries during 2024: Prior service cost at January 1, 2024, from plan amendment at the beginning of 2021 (amortization: $16 million per year) $ 112 million Net loss—AOCI at January 1, 2024 (previous losses exceeded previous gains) $ 680 million Average remaining service life of the active employee group 10 years Actuary's discount rate 7% ($ in millions) PBO Plan Assets Beginning of 2024 $ 1,800 Beginning of 2024 $ 1,600 Service cost 92 Return on plan assets, 8% (10% expected) 128 Interest cost, 7% 126 Loss (gain) on PBO (26) Cash contributions 102 Less: Retiree benefits (62) Less: Retiree benefits (62) End of 2024 $ 1,930 End of 2024 $ 1,768 1-a. Determine Mahomes's pension expense for 2024. 1-b, 2. to 4. Prepare the appropriate journal entries to record the pension expense, to record any 2024 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 Mahomes Industries during 2024: Prior service cost at January 1, 2024, from plan amendment at the beginning of 2021 (amortization: $16 million per year) $ 112 million Net loss—AOCI at January 1, 2024 (previous losses exceeded previous gains) $ 680 million Average remaining service life of the active employee group 10 years Actuary's discount rate 7% ($ in millions) PBO Plan Assets Beginning of 2024 $ 1,800 Beginning of 2024 $ 1,600 Service cost 92 Return on plan assets, 8% (10% expected) 128 Interest cost, 7% 126 Loss (gain) on PBO (26) Cash contributions 102 Less: Retiree benefits (62) Less: Retiree benefits (62) End of 2024 $ 1,930 End of 2024 $ 1,768 1-a. Determine Mahomes's pension expense for 2024. 1-b, 2. to 4. Prepare the appropriate journal entries to record the pension expense, to record any 2024 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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Question
Actuary and trustee reports indicate the following changes in the PBO and plan assets of Mahomes Industries during 2024:
| Prior service cost at January 1, 2024, from plan amendment at the beginning of 2021 (amortization: $16 million per year) | $ 112 | million |
|---|---|---|
| Net loss—AOCI at January 1, 2024 (previous losses exceeded previous gains) | $ 680 | million |
| Average remaining service life of the active employee group | 10 | years |
| Actuary's discount rate | 7% |
| ($ in millions) | |||
| PBO | Plan Assets | ||
|---|---|---|---|
| Beginning of 2024 | $ 1,800 | Beginning of 2024 | $ 1,600 |
| Service cost | 92 | Return on plan assets, 8% (10% expected) | 128 |
| Interest cost, 7% | 126 | ||
| Loss (gain) on PBO | (26) | Cash contributions | 102 |
| Less: Retiree benefits | (62) | Less: Retiree benefits | (62) |
| End of 2024 | $ 1,930 | End of 2024 | $ 1,768 |
1-a. Determine Mahomes's pension expense for 2024.
1-b, 2. to 4. Prepare the appropriate
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