II. Actuary and trustee reports indicate the following changes in the PBO and plan assets...
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Accounting
II. Actuary and trustee reports indicate the following changes in the PBO and plan assets of Sporting Goods during 2018:
Prior service cost at Jan. 1, 2018, from plan amendment at the beginning of 2015 (amortization: $2 million per year)
$14 million
Net loss-AOCI at Jan.1, 2018 (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 2018
$300
Beginning of 2018
$200
Service cost
40
Return on plan assets,
8% (10% expected)
16
Interest cost, 7%
21
Loss (gain) on PBO
(7)
Cash contributions
45
Less: Retiree benefits
(19)
Less: Retiree benefits
(19)
End of 2018
$335
End of 2018
$242
Required:
a. Determine Sporting's pension expense for 2018 and prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets.
b. Prepare the appropriate journal entries to record any 2018 gains and losses.
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