Answer:
Please see below
Explanation:
1. Calculate the pension expense for 2021.
($ millions)
Service cost. $50
Interest cost. $30
Expected return on the plan assets
(1,300 × 6%). ($78)
Amortization of prior service cost $
Amortization of net gain or loss - AOCI $
Pension expense $2
2. Journal expense to record pension expense, gains or losses, prior service cost, funding and payment of benefits for 2021.
1.
Pension expense. Dr $2
Plan assets [expected return on assets] Dr $78
To PBO (50 + 30) Cr $80
(To record the pension expense)
2.
Prior service cost - OCI Dr $18
To PBO Cr $18
(To record the prior service cost)
3.
PBO Dr $36
To Gain - OCI Cr $36
(To record the gain from change in actuarial assumption)
4.
Loss- OCI [1,300 × 6%] - ($23). Dr $55
To Plan assets Cr. $55
(To record the gain or loss on assets)
5.
Plan assets. Dr $40
To Cash Cr. $40
(To record the funding)
6.
PBO Dr $46
To Plan assets. Cr 46
(To record the retiree benefits)
3. What amount will electronic distribution report in its 2021 balance sheet as a net pension asset or net pension liability.
PBO balance, Jan 1 $530
Service cost. $50
Interest cost. $30
Gain from change in actuarial assumption. ($36)
Prior service cost(New). $18
Benefit paid ($46)
PBO balance, December 31. $546
Plan assets balance, Jan 1. $300
Actual return on plan assets $23
Contributions $40
Benefits paid ($46)
Plan assets balance, December 31 $317
PBO balance, December 31 $546
Plan assets balance, December 31 $317
Net pension liability. $229
