Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2018, Lacy received the following information:
Projected Benefit Obligation ($ in millions)
Balance, January 1....................................................$360
Service cost...............................................................60
Prior service cost.........................................................12
Interest cost (7.5%)......................................................27
Benefits paid............................................................(37)
Balance, December 31................................................$422
Plan Assets
Balance, January 1....................................................$240
Actual return on plan assets.............................................27
Contributions 2018......................................................60
Benefits paid............................................................(37)
Balance, December 31................................................$290
The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2018. At the end of 2018, Lacy amended the pension formula creating a prior service cost of $12 million.
Required:
1. Determine Lacy's pension expense for 2018.
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 2018.