Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2021, Lacy received the following information:

Projected Benefit Obligation	($ in millions)
Balance, January 1		$	520
Service cost			76
Prior service cost			28
Interest cost(5%)			26
Benefits paid			(77	)
Balance, December 31		$	573

Plan Assets	($ in millions)
Balance, January 1		$	390
Actual return on plan assets			43
Contributions, 2021			76
Benefits paid			(77	)
Balance, December 31		$	432

The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2021. At the end of 2021, Lacy amended the pension formula creating a prior service cost of $28 million.

Assume Lacy Construction prepares its financial statements according to International Financial Reporting Standards (IFRS) and that the actuary's discount rate is the rate on high-quality corporate bonds.

Required:
1. Determine Lacy’s net pension cost for 2021.
2. Prepare the journal entry(s) to record Lacy’s (a) net pension cost, (b) gains or losses, (c) prior service cost, (d) funding, and (e) payment of retiree benefits for 2021

Answer rating: 100% (QA)

Answer Solution Answer 1 Calculation of Lacys Net pension cost for 2021 Amount particulars Servi... View the full answer