Actuary and trustee reports indicate the following changes inthe PBO and plan assets of Douglas-Roberts Industries during2021:
| |
Prior service cost at Jan. 1, 2021, from plan amendment atthe
beginning of 2018 (amortization: $3 million per year) | $ | 21 | million |
| Net loss—AOCI at Jan.1, 2021 (previous losses exceeded previousgains) | $ | 160 | million |
| Average remaining service life of the active employeegroup | | 10 | years |
| Actuary's discount rate | | 7 | % |
|
| ($ in millions) | | | | | Plan | |
| PBO | Assets | |
| Beginning of 2021 | $ | 600 | | | Beginning of 2021 | | $ | 400 | | |
| Service cost | | 54 | | | Return on plan assets, | | | | | |
| | | | | 8% (10% expected) | | | 32 | | |
| Interest cost, 7% | | 42 | | | | | | | | |
| Loss (gain) on PBO | | (11 | ) | | Cash contributions | | | 98 | | |
| Less: Retiree benefits | | (32 | ) | | Less: Retiree benefits | | | (32 | ) | |
| End of 2021 | $ | 653 | | | End of 2021 | | $ | 498 | | |
|
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Required:
1-a. Determine Douglas-Roberts's pension expensefor 2021.
1-b, 2. to 4. Prepare the appropriate journalentries to record the pension expense, to record any 2021 gains andlosses, to record the cash contribution to plan assets and torecord retiree benefits.
