Electronic distribution has a defined benefit pension plan, Ask an Expert

Accounting

Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2013 are as follows:

	($ millions)
PBO balance, January 1		$530
Plan assets balance, January 1		300
Service cost		50
Interest cost		30
Gain from change in actuarial assumption		36
Benefits paid		(46)
Actual return on plan assets		23
Contributions 2013		40

The expected long-term rate of return on plan assets was 9%. There were no AOCI balances related to pensions on January 1, 2013, but at the end of 2013, the company amended the pension formula creating a prior service cost of $18 million. Assume Electronic Distribution prepares its financial statements according to International Financial Reporting Standards. Also assume that 10% is the current interest rate on high-quality corporate bonds.

Required:

Calculate the net pension cost for 2013, separating its components into appropriate categories for reporting. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

	($ in millions)
Service cost
Net interest cost
Remeasurement gain from assumption change
Remeasurement loss on plan assets
Net pension cost

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9797738

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