Acc306 Intermediate Accounting: P17-16 Actuary and trustee reports indicate (Lakeside Cable)

Acc306 Intermediate Accounting P17-16 Comprehensive— reporting a pension plan; pension spreadsheet; determine changes in balances; two years Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2011: Prior service cost at Jan. 1, 2011, from plan amendment at the beginning of 2009 (amortization: $4 million per year) $32 million Net loss-pensions at Jan. 1, 2011 (previous losses exceeded previous gains) $40million Average remaining service life of the active employee group 10 years Actuary's discount rate 8% ($in millions) PBO Plan Assets Beginning of 2011 300 Beginning of 2011 200 Service cost 48 Return on plan assets. Interest cost, 8% 24 7.5% (10% expected) 15 Loss (gain) on PBO (2) Cash contributions 45 Less: Retiree benefits (20) Less: Retiree benefits (20) End of 2011 350 End of 2011 240 Required: 1. Determine Lakeside’s pension expense for 2011 and prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets and payment of benefits to retirees. 2. Determine the new gains and/or losses in 2011 and prepare the appropriate journal entry(s) to record them. 3. Prepare a pension spreadsheet to assist you in determining end of 2011 balances in the PBO, plan assets, prior service cost-ACOI, the net loss-ACOI, and the pension liability. 4. Assume the following actuary and trustee reports indicating changes in the PBO and plan assets of Lakeside Cable during 2012: ($in millions) PBO Plan Assets Beginning of 2012 350 Beginning of 2012 240 Service cost 38 Return on plan assets. Interest cost, 8% 28 7.5% (10% expected) 36 Loss (gain) on PBO 5 Cash contributions 30 Less: Retiree benefits (16) Less: Retiree benefits (16) End of 2012 405 End of 2012 290 Determine Lakeside’s pension expense for 2012 and prepare the appropriate journal entries to record the expense, the cash funding of plan assets, and payment of benefits to retirees. 5. Determine the new gains and/or losses in 2012 and prepare the appropriate journal entry(s) to record them. 6. Using T-accounts, determine the balances at December 31, 2012, in the net loss–AOCI and prior service cost–AOCI. 7. Confirm the balances determined in Requirement 6 by preparing a pension spreadsheet
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