Question

Pension data for David Emerson Enterprises include the following:

($ in millions)
Discount rate, 12%
Projected benefit obligation, January 1 $450
Projected benefit obligation, December 31 555
Accumulated benefit obligation, January 1 390
Accumulated benefit obligation, December 31 505
Cash contributions to pension fund, December 31 240
Benefit payments to retirees, December 31 72

Required:
Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the year ended December 31.

Answer 1

$159

Step-by-step explanation:

Calculation to determine the service cost component of pension expense for the year ended December 31.

Projected benefit obligation, December 31 555

Add Benefit payments to retirees, December 31

Less Interest cost $54

(12%*450)

Less Projected benefit obligation, January 1 $450

service cost $159