Beale Management has a noncontributory, defined benefit pension plan

E 17-19 Record pension expense, funding, and gains and losses; determine account balances

Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2011 (the end of Beale's fiscal year), the following pension-related data were available:

Projected Benefit Obligation ($in millions)
Balance, January 1, 2011 $480
Service cost 82
Interest cost, discount rate, 5% 24
Gain due to changes in actuarial assumptions in 2011 (10)
Pension benefits paid (40)
Balance, December 31, 2011 $536
Plant Assets Balance, January 1, 2011 $500
Actual return on plan assets 40
(Expected return on plan assets, $45)
Cash Contributions 70
Pension benefits paid (40)
Balance, December 31, 2011 $570

January 1, 2011, balances:
Pension asset $20
Prior service cost-AOCI (amortization $8 per year) 48
Net gain-AOCI (any amortization over 15 years) 80

Required:
1. Prepare the 2011 journal entry to record pension expense.
2. Prepare the journal entry(s) to record any 2011 gains and losses.
3. Prepare the 2011 journal entries to record the contribution to plan assets and benefit payments to retirees.
4. Determine the balances at December 31, 2011, in the PBO, plan assets, the net gain–AOCI, and prior service cost–AOCI and show how the balances changed during 2011. [Hint: You might find T-accounts useful.]
5. What amount will Beale report in its 2011 balance sheet as a net pension asset or net pension liability for the funded status of the plan?

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Abbott and Abbott has a noncontributory, defined benefit pension plan

E 17-10 Determine pension expense

Abbott and Abbott has a noncontributory, defined benefit pension plan. At December 31, 2011, Abbott and Abbott received the following information:

($in millions)
Projected Benefit Obligation
Balance, January 1 $120
Service cost 20
Interest cost 12
Benefits paid (9)
Balance, December 31 $143
Plant Assets
Balance, January 1 $80
Actual return on plan assets 9
Contribution 2011 20
Benefits paid (9)
Balance, December 31 $100

The expected long-term rate of return on plan assets was 10%. There was no prior service cost and a negligible net loss AOCI on January 1, 2011.

Required:
Determine Abbott and Abbott’s pension expense for 2011. Prepare the journal entries to record Abbott and Abbott’s pension expense, funding, and payment for 2011.

Click here for the solution: Abbott and Abbott has a noncontributory, defined benefit pension plan