Brit has a defined benefit pension plan. Characteristics of the plan during 2016 are as follows:
($ millions):
DBO balance, January 1 $480
Plan assets balance, January 1 300
Service cost 75
Gain from change in an actuarial assumption 22
Benefits paid (36)
Actual return on plan assets 20
Contributions during the year 60
Average remaining service life of employees 12 years
There were no AOCI balances related to pensions on January 1, 2016, but at the year beginning, the company amended the pension formula creating a past service cost of $12 million, Brit prepares its financial statements according to International Financial Reporting Standards. 10% is the current interest rate on high quality corporate bonds.
Required:
1. Calculate the three components of net pension cost for 2016, indicating how they are reported in the income statement.
2. What amount will Brit report in its 2016 balance sheet as a net pension surplus (asset) or net pension deficit (liability)?