Question

Pension data for Millington Enterprises include the following: ($ in millions) Discount rate, 10% Projected benefit obligation, January 1$370 Projected benefit obligation, December 31 475 Accumulated benefit obligation, January 1 310 Accumulated benefit obligation, December 31 425 Cash contributions to pension fund, December 31 160 Benefit payments to retirees, December 31 56 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

The service cost component of pension expense for the year ended December 31 is $124 million

Step-by-step explanation:

Projected benefit obligation, December 31 $475

Less: Projected benefit obligation, January 1 -$370

Less: Interest cost = -37 =370*10%

Add: Benefit payments to retirees $56

Service cost $124 million