Question

Information regarding the defined-benefit pension plan of Certainty Services included the following for 2016 ($ in millions):

Plan assets, January 1...$70
Plan assets, December 31...$105
Retiree benefits paid (end of year)...$17
Employer contributions to the pension plan (end of year)...$42

What was the actual return on plan assets for 2016?

A) $10 million
B) $24 million
C) $35 million
D) $60 million

Answer 1

The actual return on plan assets for Certainty Services' defined-benefit pension plan in 2016 is calculated to be $10 million, corresponding with option A.

Step-by-step explanation:

To calculate the actual return on plan assets for Certainty Services' defined-benefit pension plan, we need to consider the opening and closing balances of plan assets, retiree benefits paid, and employer contributions during the year. The formula is:

Actual Return = (Closing plan assets + Retiree benefits paid) - (Opening plan assets + Employer contributions)

Now, plugging in the numbers provided:

Actual Return = ($105 million + $17 million) - ($70 million + $42 million)

Actual Return = $122 million - $112 million

Actual Return = $10 million

The actual return on the plan assets for 2016 was $10 million, which aligns with option A.