Problem 17–7
Requirement 1
($ in 000s)
Net gain (previous gains exceeded previous losses) $170
Requirement 2
Requirement 3
17–62 Intermediate Accounting, 8/e
Problem 17–8
( )s indicate
credits; debits
otherwise
($ in millions)
PBO
Plan
Assets
Prior
Service
Cost
–AOCI
Net
Loss
–AOCI
Pension
Expense
Cash
Net
Pension
(Liability) /
Asset
(830)
680
20
93
(150)
Service cost
(74)
74
(74)
(83)
83
(83)
(7)
Interest
Amortization of:
Prior
service
cost
(5)
5
Net loss
(1)
1
(13)
(13)
(40)
(40)
(50)
Problem 17–8 (concluded)
Calculations:
Interest cost = $830 x 10% = $83
Amortization of net loss:
Requirement 2
($ in millions)
Pension expense (total) …………………………………………………….. 95
Requirement 3
Record gains and losses and new prior service cost
($ in millions)
Loss—OCI ($61 actual return on assets less than $68 expected return) 7
Requirement 4
($ in millions)
Plan assets 84
17–2 Intermediate Accounting, 8e
Problem 17–9
1. Pension expense ($ in 000s)
Service cost $60
2. Projected Benefit Obligation
Balance, January 1 $320
3. Plan Assets
Balance, January 1 $400
4. Net Pension Asset or Net Pension Liability
Problem 17–9 (concluded)
5. Journal Entries
($ in 000s)
Pension expense (total) …………………………………………………….. 40
* Because Prior service cost—AOCI and Net loss—AOCI have debit balances, we amortize them with credits.
We would amortize a Net gain—AOCI (credit balance) with a debit. After the two amortization amounts are
reported as OCI in this year’s statement of comprehensive income, the respective AOCI amounts in the balance
sheet are reduced.
17–4 Intermediate Accounting, 8e
Problem 17–10
Requirement 1
($ in millions)
Service cost $ 75
Requirement 2
($ in millions)
Pension expense (calculated above) 96
Problem 17–10 (concluded)
Requirement 3
($ in millions)
PBO balance, January 1 $480
Service cost 75
17–6 Intermediate Accounting, 8e
Problem 17–11
Requirement 1
($ in millions)
Reported in income statement:
Problem 17–11 (continued)
Requirement 2
($ in millions)
Service cost 87
DBO (Service cost—2016) 75
Problem 17–11 (concluded)
Requirement 3
($ in millions)
DBO balance, January 1 $480
Service cost 75
Problem 17–12
Requirement 1 ($ in millions)
2016 2017
Service cost (given) $520 $570
*** Net Gain—AOCI
2016
Net gain—AOCI at 1-1-2016 $230
No amortization for 2017
17–10 Intermediate Accounting, 8e
Problem 17–12 (continued)
Requirement 2
($ in millions)
2016
Pension expense (total) ……………………………………………………… 583
Requirement 3
($ in millions)
2016
Loss—OCI ($180 actual return on assets less than $192 expected return) 12
Problem 17–12 (concluded)
Requirement 4
($ in millions)
2016
Plan assets 540
Cash (contribution to plan assets) 540
Problem 17–13
Projected Benefit Pension
Obligation Plan Assets Expense
Balance at Jan. 1 $ 0 $ 0
Prior service cost 2,000,000 2,000,000
Amortization of prior service cost
Note: The $40,000 gain ($220,000 – 180,000), while not included in pension
expense, is reported as a gain—OCI in the statement of comprehensive
Problem 17–14
1. Actual return on plan assets
($ in 000s)
Plan assets
Beginning of 2016 $2,400
2. Loss or gain on plan assets
3. Service cost
PBO:
Beginning of 2016 $2,300
Service cost ?
17–14 Intermediate Accounting, 8e
Problem 17–14 (concluded)
4. Pension expense
($ in 000s)
Service cost $310
5. Average remaining service life of active employees
Net gain, Jan. 1 $330
Problem 17–15
( )s indicate
credits; debits
otherwise
($ in 000s)
PBO
Plan
Assets
Prior
Service
Cost
–AOCI
Net
Loss
–AOCI
Pension
Expense
Cash
Net
Pension
(Liability)
/ Asset
Balance, Jan.
1, 2016
(4100)
4530
840
477
430
Service
cost2
(332)
332
(332)
Amortization of:
Prior
service
cost5
(70)
70
4975
770
484
238
1 7% x $4,100 = $287
Problem 17–16
Requirement 1
Calculation of pension expense: ($ in millions)
Service cost (given) $48
* Amortization of the net loss:
Net loss—AOCI (previous losses exceeded previous gains) $40
To record expense
($ in millions)
Pension expense (total) ……………………………………………………… 57
To record funding and benefit payment
Problem 17–16 (continued)
Requirement 2
To record gains and losses
($ in millions)
Requirement 3
( )s indicate credits; debits
otherwise
($ in millions)
PBO
Plan
Assets
Prior
Service
Cost
–AOCI
Net
Loss
–AOCI
Pension
Expense
Cash
Net
Pension
(Liability)
/ Asset
17–18 Intermediate Accounting, 8e
Problem 17–16 (continued)
Requirement 4
Calculation of pension expense: ($ in millions)
Service cost (given) $38
Interest cost (given) 28
To record expense
($ in millions)
To record funding and benefit payments
($ in millions)