Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2021: Prior service cost at Jan. 1, 2021, from plan amendment at thebeginning of 2018 (amortization: $5 million per year)$35millionNet loss—AOCI at Jan.1, 2021 (previous losses exceeded previous gains)$180millionAverage remaining service life of the active employee group 10yearsActuary's discount rate 7% ($ in millions) Plan PBOAssets Beginning of 2021$800 Beginning of 2021 $600 Service cost 58 Return on plan assets, 8% (10% expected) 48 Interest cost, 7% 56 Loss (gain) on PBO (13) Cash contributions 100 Less: Retiree benefits (34) Less: Retiree benefits (34) End of 2021$867 End of 2021 $714 Required:1-a. Determine Douglas-Roberts's pension expense for 2021.1-b, 2. to 4. 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.

Pension Cost is the cost of maintaining an employee's pension plan on a yearly basis. Employers who…

Answered: per year) $ 35 million Net loss—AOCI at…

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:


Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018 (amortization: $5 million per year)	$	35	million
Net loss—AOCI at Jan.1, 2021 (previous losses exceeded previous gains)	$	180	million
Average remaining service life of the active employee group		10	years
Actuary's discount rate		7	%

($ in millions)				Plan
PBO	Assets
Beginning of 2021	$	800		Beginning of 2021	$	600
Service cost		58		Return on plan assets,
				8% (10% expected)		48
Interest cost, 7%		56
Loss (gain) on PBO		(13	)	Cash contributions		100
Less: Retiree benefits		(34	)	Less: Retiree benefits		(34	)
End of 2021	$	867		End of 2021	$	714

Required:
1-a. Determine Douglas-Roberts's pension expense for 2021.
1-b, 2. to 4. 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.

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