The Lane Company was incorporated in 2001. Because it had become successful, the company established a defined benefit pension plan for its employees on January 1, 2010. Due to the loyalty of its employees, the company granted retroactive benefits to them. These retroactive benefits resulted in $1,240,000 of prior service cost on that date. The company decided to amortize this cost using the years-of-future-service method. The company€™s actuary and funding agency have provided the following additional information for 2010 and 2011:

The company contributed $690,000 and $660,000 to the pension fund at the end of 2010 and 2011, respectively. No retirement benefits were paid in 2010 or 2011. There are no other components of Lane Company€™s pension expense. At the end of 2011, the projected benefit obligation was $2,452,914 and the fair value of the pension plan assets was $1,412,100.

Required
1. Compute the amount of Lane Company€™s pension expense for 2010 and 2011.
2. Prepare all the journal entries related to Lane Company€™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 a liability?
4. Prepare a schedule that reconciles the beginning and ending amounts of the projected benefit obligation for2010.

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2011 990 2010 Expected long-term (and actual) rate of return on plan assets Amortization fraction for prior service cost Discount rate Plan assets (1/1) Projected benefit obligation (1/1) Service cost 46/620 48/620 9% 9% $0 690,000 1,240,0001,814,600 475,000 463,000 Due to the prior service cost