A partially completed pension spreadsheet showing therelationships among the elements that constitute Carney, Inc.’sdefined benefit pension plan follows. At theend of 2018, Carney revised its pensionformula and incurred a prior service cost of $100 million. At theend of 2019, the pension formula wasamended again, creating an additional prior service cost of $200million. At the beginning of 2020, $400million prior service cost was incurred. At thebeginning of 2021, $300 million priorservice cost was incurred. In 2018 - 2021, the actuary’s discountrate remained 10%, and the average remaining service life of theactive employee group remained 10 years. The expected rate ofreturn on assets was 10% in 2019, and increased by 1% eachyear.
- Prepare all the necessary journal entries for 2019.
2019 Pension spreadsheet ($ in millions) | (PBO) | Plan Assets | Prior Service Cost–AOCI | Net Loss (Gain) –AOCI | Pension Expense | Cash | Net Pension (Liability) / Asset |
Balance, Jan. 1, 2019 | (25,000) | 20,000 | 100 | 4,500 | | | (5,000) |
Service cost | (800) | | | | 800 | | (800) |
Interest cost | (2,500) | | | | 2,500 | | (2,500) |
Prior Service Cost | (200) | | 200 | | | | (200) |
Expected return on assets | | 2,000 | | | (2,000) | | 2,000 |
Adjust for: Gain (loss) on assets | | 400 | | (400) | | | 400 |
Amortization of: "Prior service cost-AOCI" | | | (10) | | 10 | | |
Amortization of: "Net Loss (Gain)-AOCI" | | | | (200) | 200 | | |
Gain (Loss) on PBO | 7000 | | | (7,000) | | | 7,000 |
Cash funding | | 1,000 | | | | (1,000) | 1,000 |
Retiree benefits | 950 | (950) | | | | | |
Bal., Dec. 31, 2019 | (20,550) | 22,450 | 290 | (3,100) | 1,510 | | 1,900 |
