Solution-Prepare the journal entry to record lacy pension

Prepare the journal entry to record lacy pension expense

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Reference no: EM131787891

Question: Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2011, Lacy received the following information:

Projected Benefit Obligation	($ in millions)
Balance, January 1	$360
Service cost	60
Interest cost	36
Benefits paid	(27)
Balance, December 31	$429

Plan Assets	($ in millions)
Balance, January 1	$240
Actual return on plan assets	27
Contributions 2011	60
Benefits paid	(27)
Balance, December 31	$300

The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2011. At the end of 2011, Lacy amended the pension formula creating a prior service cost of $12 million, one-third of which is related to employees whose pension benefits have vested.

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

Required:

(1) Determine Lacy's pension expense for 2011.

(2) Prepare the journal entry(s) to record Lacy's pension expense, gains or losses, prior service cost, funding, and payment of retiree benefits for 2011.

Reference no: EM131787891

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Prepare the journal entry to record lacy pension expense

Reference no: EM131787891

Reference no: EM131787891

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