Question

brown industries operates a defined benefit pension plan. information received from the actuary and the trustee related to the year 2 pension plan includes the following: projected benefit obligation, january 1, year 2 $1,889,000 service cost 105,000 interest cost 190,000 retirement benefits paid 182,000 employer contribution 155,000 actual return on plan assets 215,000 amortization of prior service cost 122,000 amortization of prior-year net pension loss 37,000 fair value -- pension plan assets, december 31, year 1 1,825,000 brown’s year 2 net pension cost is

Answer 1

Brown’s Year 2 net pension plan cost is- $239,000

Pension Cost = Service Cost + Interest Cost + Prior Service Cost + Prior Loss - Actual Return

= $105,000 + $190,000 + $122,000 + $37,000 - $215,000

= $239,000.

A retirement plan is an employee benefit plan established or maintained by an employer and/or an employee organization.

A pension plan is a type of retirement plan that provides monthly income after retirement. Employers are obliged to contribute to the pool of funds invested for the benefit of their employees. As an employee, you can also pay part of your wages to the plan. Not all companies offer these plans.

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