Question

Scallion Company received the following reports of its defined benefit pension plan for the current calendar year: PBO Plan assets Balance, January 1 $ 460,000 Balance, January 1 $ 256,000 Service cost 193,000 Actual return 39,000 Interest cost 31,000 Annual contribution 111,000 Benefits paid (83,000 ) Benefits paid (83,000 ) Balance, December 31 $ 601,000 Balance, December 31 $ 323,000 The long-term expected rate of return on plan assets is 10%. Assuming no other data are relevant, what is the pension expense for the year?

Answer 1

$198,400

Step-by-step explanation:

Explanation- Pension expense for the year =Service cost+ Interest cost- Expected return on plan assets

= $193000 + $31000- ($256000 x 10%)

= $224000 - $25600

= $198,400

The pension expense for the year is = $198,400

Answer 2

The pension expense for the year is 198,400

Step-by-step explanation:

According to the reports received by the company we have the following relevant data to calculate the pension expense for the year:

Service cost of $ 193,000

Interest cost of $ 31,000

Considering that the long-term expected rate of return on plan assets is 10%, then $ 256,000×10%= 25,600

Pension expense for the year= Service cost of $ 193,000 +Interest cost of $ 31,000-25,600= 198,400.