Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2016, Lacy received thefollowing information:Projected Benefit Obligation($ in millions)Balance, January 1$360Service cost60Prior service cost1227Interest cost (7.5%)Benefits paid(37)Balance, December 31$422Plan AssetsBalance, January 1Actual return on plan assets$2402760Contributions 2016Benefits paid(37)Balance, December 31$290The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pen-sions on January 1, 2016. At the end of 2016, Lacy amended the pension formula creating a prior service cost of$12 million.Required:1. Determine Lacy's pension expense for 2016.2. Prepare the journal entry(s) to record Lacy's pension expense, gains or losses, prior service cost, funding, andpayment of retiree benefits for 2016.

Answered: Lacy Construction has a…

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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