Lewis Industries adopted a defined benefit pension plan on January 1, 2021. By making the provisions of the plan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost was funded immediately by a $2 million cash payment to the fund trustee on January 2, 2021. However, the cost is to be amortized (expensed) over 10 years. The service cost—$250,000 for 2021—is fully funded at the end of each year. Both the actuary’s discount rate and the expected rate of return on plan assets were 9%. The actual rate of return on plan assets was 11%. At December 31, the trustee paid $16,000 to an employee who retired during 2021.Required:Determine each of the following amounts as of December 31, 2021, the fiscal year-end for Lewis:1. Projected benefit obligation.2. Plan assets.3. Pension expense.
Lewis Industries adopted a defined benefit pension plan on January 1, 2021. By making the provisions of the plan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost was funded immediately by a $2 million cash payment to the fund trustee on January 2, 2021. However, the cost is to be amortized (expensed) over 10 years. The service cost—$250,000 for 2021—is fully funded at the end of each year. Both the actuary’s discount rate and the expected
Required:
Determine each of the following amounts as of December 31, 2021, the fiscal year-end for Lewis:
1. Projected benefit obligation.
2. Plan assets.
3. Pension expense.
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