Question $3$: Pension Plans & Complex Actuarial Assumptions

A company's defined benefit pension plan has a Projected Benefit Obligation $($PBO$)$ of $$10$ million and plan assets with a fair value of $$8$ million.

The actuary provides the following data:

Service Cost for the year: $$600,000$

Interest Cost: $$800,000$

Expected Return on Plan Assets: $7\%$

Contributions during the year: $$1$ million

Benefits paid to retirees: $$500,000$

Tasks:

Prepare journal entries to record pension expense, plan asset returns, contributions, and benefit payments.

Calculate the ending balances of the PBO and plan assets

Determine the company's funded status and explain how this is presented on the balance sheet.

Discuss the sensitivity of pension accounting to actuarial assumptions and how changes in these assumptions might impact the company's financials.Kindly do not provide chat gpt answers, posting this question $3$rd time here. If feel the question is from chatgpt and copied from any other source,

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