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Homework answers / question archive / Lacy Construction has a noncontributory, defined benefit pension plan
Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2021, Lacy received the following information:
Projected Benefit Obligation ($ in millions) 2 Balance, January 1 $1,080 Service cost 88 points Prior service cost 40 Interest cost(5.0%) 54 Benefits paid (76) eBook Balance, December 31 $1,186
Hint
Print Plan Assets ($ in millions) Balance, January 1 $ 510 Actual return on plan assets 53 Contributions 2021 88 Benefits paid (76) Balance, December 31 $ 575
The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1. 2021. At the end of 2021, Lacy amended the pension formula creating a prior service cost of $40 million.
Required: 1. Determine Lacy's pension expense for 2021. 2. Prepare the journal entry(s) to record Lacy's (a) pension expense, (b) gains or losses, (c) prior service cost, (d) funding, and (e) payment of retiree benefits for 2021.
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