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)
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$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.