Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2021:Required:1. Determine Douglas-Roberts's pension expense for 2021.2. 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.Record annual pension expense.Record the change in plan assets.Record the change in the PBO.Record the cash contribution to plan assets.Record the retiree benefits paid. Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018(amortization: $4 million per year)Net loss-AOCI at Jan. 1, 2021 (previous losses exceeded previous gains)Average remaining service life of the active employee groupActuary's discount rate$ 28 million$ 80 million10 years7 %($ in millions)PlanPBOAssets$ 600Beginning of 2021Service costBeginning of 2021Return on plan assets,8% (10% expected)$ 4008032Interest cost, 7%Loss (gain) on PBOLess: Retiree benefits42Cash contributions(14)(38)$ 67090Less: Retiree benefits(38)End of 2021End of 2021$ 484

Plan assets are those assets which are held for the sole purpose of providing benefits to the…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

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:

Required:
1. Determine Douglas-Roberts's pension expense for 2021.
2. 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.

Record annual pension expense.
Record the change in plan assets.
Record the change in the PBO.
Record the cash contribution to plan assets.
Record the retiree benefits paid.

Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018
(amortization: $4 million per year)
Net loss-AOCI at Jan. 1, 2021 (previous losses exceeded previous gains)
Average remaining service life of the active employee group
Actuary's discount rate
$ 28 million
$ 80 million
10 years
7 %
($ in millions)
Plan
PBO
Assets
$ 600
Beginning of 2021
Service cost
Beginning of 2021
Return on plan assets,
8% (10% expected)
$ 400
80
32
Interest cost, 7%
Loss (gain) on PBO
Less: Retiree benefits
42
Cash contributions
(14)
(38)
$ 670
90
Less: Retiree benefits
(38)
End of 2021
End of 2021
$ 484

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