Lacy Construction has a noncontributory, defined benefit pension plan. At Decemb
ID: 2713977 • Letter: L
Question
Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2016, 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, 2016. At the end of 2016, Lacy amended the pension formula creating a prior service cost of $12 million.
Determine Lacy's pension expense for 2016.
Pension Expense :
Prepare the journal entry(s) to record Lacy’s pension expense, gains or losses, prior service cost, funding, and payment of retiree benefits for 2016. (If no entry is required for a transaction/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, 2016, Lacy received the following information:
Explanation / Answer
Amount
Service Cost
60
Interest cost
27
Ammortization of prior service cost
12
Actual return on plant assets
-27
Pension Expense
72
So pension expense is 72 million
Journal Entry:
Pension expense Dr… 72 million
Cash 60 million
Prepaid pension cost 12 million
Amount
Service Cost
60
Interest cost
27
Ammortization of prior service cost
12
Actual return on plant assets
-27
Pension Expense
72
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