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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

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?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Employee Compensations and Benefits

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions