Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during
2024 are as follows:
The expected long-term rate of return on plan assets was 8%. There were no AOCI balances
related to pensions on January 1, 2024, but at the end of 2024, the company amended the pension
formula, creating a prior service cost of $18 million. Assume Electronic Distribution prepares its
financial statements according to International Financial Reporting Standards (IFRS). Also
assume that 10% is the current interest rate on high-quality corporate bonds.
Required:
1. Calculate the net pension cost for 2024, separating its components into appropriate categories
for reporting.
2. Prepare the journal entries to record (a) the components of net pension cost, (b) gains or
losses, (c) past service cost, (d) funding, and (e) payment of benefits for 2024.
3. What amount will Electronic Distribution report in its 2024 balance sheet as a net pension
asset or net pension liability?
($ millions)DBO balance, January 1$620Plan assets balance, January 1400Service cost95Interest
cost75Gain from change in actuarial assumption32Benefits paid(64)Actual return on plan
assets25Contributions 202485.
Electronic Distribution has a defined benefit pension plan. Characte.pdf
1. Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during
2024 are as follows:
The expected long-term rate of return on plan assets was 8%. There were no AOCI balances
related to pensions on January 1, 2024, but at the end of 2024, the company amended the pension
formula, creating a prior service cost of $18 million. Assume Electronic Distribution prepares its
financial statements according to International Financial Reporting Standards (IFRS). Also
assume that 10% is the current interest rate on high-quality corporate bonds.
Required:
1. Calculate the net pension cost for 2024, separating its components into appropriate categories
for reporting.
2. Prepare the journal entries to record (a) the components of net pension cost, (b) gains or
losses, (c) past service cost, (d) funding, and (e) payment of benefits for 2024.
3. What amount will Electronic Distribution report in its 2024 balance sheet as a net pension
asset or net pension liability?
($ millions)DBO balance, January 1$620Plan assets balance, January 1400Service cost95Interest
cost75Gain from change in actuarial assumption32Benefits paid(64)Actual return on plan
assets25Contributions 202485
