Question

exercise 17-10 Determine pension expense [LO17-6, 17-7]

Abbott and Abbott has a noncontributory, defined benefit pension plan. At December 31, 2018, Abbott and Abbott received the following information:

Projected Benefit Obligation	($ in millions)
Balance, January 1		$	120
Service cost			20
Interest cost			12
Benefits paid			(9	)
Balance, December 31		$	143

Plan Assets
Balance, January 1		$	80
Actual return on plan assets			9
Contributions 2018			20
Benefits paid			(9	)
Balance, December 31		$	100

The expected long-term rate of return on plan assets was 10%. There was no prior service cost and a negligible net loss–AOCI on January 1, 2018.

Required:
1. Determine Abbott and Abbott’s pension expense for 2018.
2. Prepare the journal entries to record Abbott and Abbott’s pension expense, funding, and payment for 2018.

Answer 1