Prepare the appropriate journal entries to record expense

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Reference no: EM13847402

Actuary and trustee reports indicate the following changes in the PBO and plan assets of Sporting Industries during 2013:

Prior service cost at Jan. 1, 2013, from plan amendment at the beginning of 2010 (amortization: $2 million per year)

$14 million

Net loss-AOCI at Jan.!, 2013 (previous losses exceeded previous gains)

$40 million

Average remaining service life of the active employee group

10 years

Actuary's discount rate

7%

($ in millions)

PBO

 

PLAN ASSETS

Beginning of 2013

$300

Beginning of 2013

$200

Service cost

40

Return on plan assets,

 

Interest cost, 7%

21

8% (10% expected)

16

Loss (gain) on PBO

(7)

Cash contributions

45

Less: Retiree benefits

(19)

Less: Retiree benefits

(19)

End of 2013

5335

End of 2013

1242

Required:

1) Determine Sporting's pension expense for 2013 and prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets.

2) Prepare the appropriate journal entries to record any 2013 gains and losses.

Reference no: EM13847402

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