Question

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

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 $ 500
Service cost 74
Prior service cost 26
Interest cost(5.0%) 25
Benefits paid (72 )
Balance, December 31 $ 553
Plan Assets ($ in millions)
Balance, January 1 $ 370
Actual return on plan assets 42
Contributions 2018 74
Benefits paid (72 )
Balance, December 31 $ 414


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 $26 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.

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