Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2021 are as follows:     ($ millions) PBO balance, January 1 $ 480   Plan assets balance, January 1   300   Service cost   75   Interest cost   45   Gain from change in actuarial assumption   22   Benefits paid   (36 ) Actual return on plan assets   20   Contributions 2021   60       The expected long-term rate of return on plan assets was 8%. There were no AOCI balances related to pensions on January 1, 2021, but at the end of 2021, the company amended the pension formula, creating a prior service cost of $12 million.   Required: 1. Calculate the pension expense for 2021. 2. Prepare the journal entries to record (a) pension expense, (b) gains or losses, (c) prior service cost, (d) funding, and (e) payment of benefits for 2021. 3. What amount will Electronic Distribution report in its 2021 balance sheet as a net pension asset or net pension liability?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2021 are as follows:
 

  ($ millions)
PBO balance, January 1 $ 480  
Plan assets balance, January 1   300  
Service cost   75  
Interest cost   45  
Gain from change in actuarial assumption   22  
Benefits paid   (36 )
Actual return on plan assets   20  
Contributions 2021   60  
 

 
The expected long-term rate of return on plan assets was 8%. There were no AOCI balances related to pensions on January 1, 2021, but at the end of 2021, the company amended the pension formula, creating a prior service cost of $12 million.
 
Required:
1. Calculate the pension expense for 2021.
2. Prepare the journal entries to record (a) pension expense, (b) gains or losses, (c) prior service cost, (d) funding,
and (e) payment of benefits for 2021.
3. What amount will Electronic Distribution report in its 2021 balance sheet as a net pension asset or net pension liability?

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