Lacy Construction has a noncontributory, defined benefit pension plan. At Decemb

Question

Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2013, Lacy received the following information:

        

       

      

     The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2013. At the end of 2013, Lacy amended the pension formula creating a prior service cost of $12 million.

Assume Lacy Construction prepares its financial statements according to International Accounting Standards.

      

Determine Lacy’s pension expense for 2013. (Enter your answer in millions.)

     

Prepare the journal entry(s) to record Lacy’s pension expense, gains or losses, prior service cost, funding, and payment of retiree benefits for 2013. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions. (i.e., 10,000,000 should be entered as 10).

     

Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2013, Lacy received the following information:

Explanation / Answer

Determine Lacy’s pension expense for 2013

2) Journal Entry
1) Service Cost $60
   Projected Benefit Obligation $60
2) Interest Cost $27
   Plan Assets $27
3) Remeasurement Gain $24
   Plan Assets $24

Service Cost $60 millions Interest Cost (7.5%) $27 million Less: Expected rate of return on Plan assets ($240 x 10%) ($24) millions Lacy's Pension Expense 2013 $63 millions

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