Calculate the three components of net pension cost

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Reference no: EM131264511

Harry Johnson has a defined benefit pension plan. Characteristics of the plan during 2014 are as follows:

($ millions):

DBO balance, January 1 $480

assets balance, January 1 300

cost 75

Gain from change in an actuarial assumption 22

Benefits paid (36)

Actual return on plan assets 20

Contributions during the year 60

Average remaining service life of employees 12 years

There were no AOCI balances related to pensions on January 1, 2014, but at the year beginning, the company amended the pension formula creating a past service cost of $12 million, HJ prepares its financial statements according to International Financial Reporting Standards. 10% is the current interest rate on high quality corporate bonds.

Required:

1. Calculate the three components of net pension cost for 2016, indicating how they are reported in the income statement.

Reference no: EM131264511

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