Question

Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2018, Lacy received the following information:

Projected Benefit Obligation	($ in millions)
Balance, January 1		$	760
Service cost			100
Prior service cost			52
Interest cost(5.0%)			38
Benefits paid			(99	)
Balance, December 31		$	851

Plan Assets	($ in millions)
Balance, January 1		$	630
Actual return on plan assets			65
Contributions 2018			100
Benefits paid			(99	)
Balance, December 31		$	696

The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2018. At the end of 2018, Lacy amended the pension formula creating a prior service cost of $52 million.

Required:
1. Determine Lacy's pension expense for 2018.
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 2018.

Answer 1

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