On January 1, 2010, the Parkway Company adopted a defined benefit pension plan. At that time, the company awarded retroactive benefits to its employees, resulting in a prior service cost of $2,180,000 on that date (which it did not fund). The company decided to amortize this cost by the straight-line method over the 16-year average remaining service life of its active participating employees. The company€™s actuary and funding agency have also provided the following additional information for 2010 and 2011:

The company contributed $670,000 and $700,000 to the pension fund at the end of 2010 and 2011, respectively. There are no other components of Parkway Company€™s pension expense. At the end of 2011, the projected benefit obligation was $3,359,800 and the fair value of the pension plan assets was $1,430,300.

Required
1. Compute the amount of Parkway Company€™s pension expense for 2010 and 2011.
2. Prepare all the journal entries related to Parkway Corporation€™s pension plan for 2010 and 2011.
3. What is the total accrued/prepaid pension cost at the end of 2011? Is it an asset or aliability?

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2010 2011 340,000 348,000 2,180,000* $2.738,000 Service cost Projected benefit obligation (1/1) Plan assets (1/1) Discount rate Expected long-term (and actual) rate of return on plan assets 670,000 10% 10% 990 Due to the prior service cost