Question - Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2013, Lacy received the following information:
Projected Benefit Obligation ($ in millions)
Balance, January 1 $ 500
Service cost 74
Interest cost (5%) 25
Benefits paid (72)
Balance, December 31 $ 527
Plan Assets ($ in millions)
Balance, January 1 $ 370
Actual return on plan assets 42
Contributions 2013 74
Benefits paid (72)
Balance, December 31 $ 414
The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2013.
At the end of 2013, Lacy amended the pension formula creating a prior service cost of $26 million.
Required:
1. Determine Lacy's pension expense for 2013.
2. Prepare the journal entry(s) to record Lacy's pension expense, gains or losses, prior service cost, funding, and payment of retiree benefits for 2013.