Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2016, Lacy received the following information: Projected Benefit Obligation ($ in millions) Balance, January 1 $360 Service cost 60 Prior service cost 12 27 Interest cost (7.5%) Benefits paid (37) Balance, December 31 $422 Plan Assets Balance, January 1 Actual return on plan assets $240 27 60 Contributions 2016 Benefits paid (37) Balance, December 31 $290 The 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, and payment of retiree benefits for 2016.

Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2016, Lacy received the following information: Projected Benefit Obligation ($ in millions) Balance, January 1 $360 Service cost 60 Prior service cost 12 27 Interest cost (7.5%) Benefits paid (37) Balance, December 31 $422 Plan Assets Balance, January 1 Actual return on plan assets $240 27 60 Contributions 2016 Benefits paid (37) Balance, December 31 $290 The 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, and payment of retiree benefits for 2016.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 4E

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