The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are presented below ($ in millions): Information Provided by Pension Plan Actuary: Projected benefit obligation as of December 31, 2023 = $1,800. Prior service cost from plan amendment on January 2, 2024 = $400 (straight-line amortization for 10-year average remaining service period). Service cost for 2024 = $520. Service cost for 2025 = $570. Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10%. Payments to retirees in 2024 = $380. Payments to retirees in 2025 = $450. No changes in actuarial assumptions or estimates. Net gain—AOCI on January 1, 2024 = $230. Net gains and losses are amortized for 10 years in 2024 and 2025. Information Provided by Pension Fund Trustee: Plan asset balance at fair value on January 1, 2024 = $1,600. 2024 contributions = $540. 2025 contributions = $590. Expected long-term rate of return on plan assets = 12%. 2024 actual return on plan assets = $180. 2025 actual return on plan assets = $210. Calculate pension expense for 2024 and 2025. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). ($ in millions) 2024 2025 Service costselected answer correct $520.0 $570.0 Interest on PBOselected answer correct 220.0 256.0 Expected returnselected answer correct (192.0) ? Amortization of prior service costselected answer correct 40.0 40.0 Amortization of net gainselected answer correct (5.0) ? not attempted Pension expense $583.0 $

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 4E

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Related questions

Question

The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are presented below ($ in millions):

Information Provided by Pension Plan Actuary:

Projected benefit obligation as of December 31, 2023 = $1,800.
Prior service cost from plan amendment on January 2, 2024 = $400 (straight-line amortization for 10-year average remaining service period).
Service cost for 2024 = $520.
Service cost for 2025 = $570.
Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10%.
Payments to retirees in 2024 = $380.
Payments to retirees in 2025 = $450.
No changes in actuarial assumptions or estimates.
Net gain—AOCI on January 1, 2024 = $230.
Net gains and losses are amortized for 10 years in 2024 and 2025.

Information Provided by Pension Fund Trustee:

Plan asset balance at fair value on January 1, 2024 = $1,600.
2024 contributions = $540.
2025 contributions = $590.
Expected long-term rate of return on plan assets = 12%.
2024 actual return on plan assets = $180.
2025 actual return on plan assets = $210.

Calculate pension expense for 2024 and 2025.

Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).

	($ in millions)
2024	2025
Service costselected answer correct	$520.0	$570.0
Interest on PBOselected answer correct	220.0	256.0
Expected returnselected answer correct	(192.0)	?
Amortization of prior service costselected answer correct	40.0	40.0
Amortization of net gainselected answer correct	(5.0)	?
not attempted
Pension expense	$583.0	$

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