Question

The following information is related to the defined benefit pension plan of Simpson Company for the year: Service cost $ 96,000 Contributions to pension plan 147,000 Benefits paid to retirees 113,000 Plan assets (fair value), January 1 543,000 Plan assets (fair value), December 31 667,000 Actual return on plan assets 90,000 PBO, January 1 830,000 PBO, December 31 896,000 Discount rate 10 % Long-term expected return on plan assets 9 % Assuming no other relevant data exist, what is the pension expense for the year?

Answer 1

$130,130

Step-by-step explanation:

Service cost = $ 96,000

PBO, January 1 = 830,000

Plan assets (fair value), January 1 = 543,000

Interest cost = PBO, January 1 × Discount rate

= 830,000 × 10%

= 83,000

Expected return on Plan assets:

= Plan assets (fair value), January 1 × Long-term expected return on plan assets

= 543,000 × 9%

= 48,870

pension expense:

= Service cost + Interest cost - Expected return on Plan assets

= $96,000 + 83,000 - 48,870

= $130,130