Answer:
1. Service cost $294 million
2. Net Pension Liabiltiy $24 million
Net pension Assets $20 million
Explanation:
1. Calculation to determine the service cost component of pension expense for the year ended December 31
SERVICE COST ($ in millions)
Projected benefit obligation, December 31 540
Less Projected benefit obligation, January 1 ($350)
Less Interest Cost ($35)
(10%*$350)
Add Benefit payments to retirees, December 31 $69
Service cost $294
($540 - $350 - $35 + $69)
Therefore the service cost component of pension expense for the year ended December 31 will be $294
2. Calculation to determine pension liability that must be reported in the balance sheet using this formula
Pension Liabiltiy=Projected benefit obligation-Plan Assets
Let plug in the formula
Net Pension Liabiltiy=$80 million-$56 million
Pension Liabiltiy=$24 million
Therefore The pension liability that must be reported in the balance sheet will be $24 million
Calculation to determine What would JDS report if the plan assets were $100 million instead
Using this formula
Net pension Assets=Plan Assets-Projected benefit obligation
Let plug in the formula
Net pension Assets=$100 million instead-$80 million
Net pension Assets=$20 million
Therefore What would JDS report if the plan assets were $100 million instead is $20 million
