Question

Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2021 (the end of Beale's fiscal year), the following pension-related data were available:

Projected Benefit Obligation	($ in millions)
Balance, January 1, 2021		$	720
Service cost			74
Interest cost, discount rate, 5%			36
Gain due to changes in actuarial assumptions in 2021			(20	)
Pension benefits paid			(36	)
Balance, December 31, 2021		$	774

Plan Assets	($ in millions)
Balance, January 1, 2021		$	800
Actual return on plan assets			46
(Expected return on plan assets, $51)
Cash contributions			87
Pension benefits paid			(36	)
Balance, December 31, 2021		$	897

January 1, 2021, balances:	($ in millions)
Pension asset	$	80
Prior service cost—AOCI (amortization $6 per year)		30
Net gain—AOCI (any amortization over 10 years)		130

Required:
Prepare a pension spreadsheet to show the relationship among the PBO, plan assets, prior service cost, the net gain, pension expense, and the net pension asset. (Enter credit amounts with a minus sign and debit amounts with a positive sign. Enter your answers in millions.)

			Prior				Net Pension
		Plan	Service	Net	Pension		(Liability) /
($ in millions)	PBO	Assets	Cost-AOCI	Gain-AOCI	Expense	Cash	Asset
Balance, Jan. 1, 2021
Service cost
Interest cost, 5%
Expected return on assets
Adjust for:
Loss on assets
Amortization of:
Prior service cost
Net gain
Gain on PBO
Cash funding
Retiree benefits
Balance, Dec. 31, 2021	$0	$0	$0	$0	$0		$0

Answer 1

Solution:

	PBO	Plan Assets	Prior service cost AOCI	Net gain - AOCI	Pension expenses	Cash	Net pension (liabilities / Assets)
Balance 1 ,2021	($720)	$800	$30	($130)			$80
Service cost	($74)				$74		($74)
Interest cost 5%	($36)				36		($36)
Expected retrun on assets		51			(51)		51
Adjust for
Loss on assets (51- 46)		(5)		5			(5)
Amortization
Prior service cost			($6)		$6
Amortization:
Net gain [(800*10%)-130]/10				5	(5)
Gain on PBO	$20			($20)			20
Cash funding		$87				($87)	$87
Retiree benefits	$36	($36)
	($774)	$897	$24	$120	$60		$123