Answer:
The pension expense for the year is $400600
Explanation:
From the question; we have:
Babcock Company received the following reports of its defined benefit pension plan for the current calendar year:
PBO Plan assets
Balance, January 1 650,000 Balance, January 1 530,000
Service cost 369,00 Actual return 51,000
Interest cost 74,000 Annual contribution 226,000
Benefits paid (97,000 ) Benefits paid (97,000 )
Balance,December 31 $996,000 Balance, December 31 $710,000
The long-term expected rate of return on plan assets is 8%. Assuming no other data are relevant, what is the pension expense for the year
From the information given;we have the plan assets to be $530000
the expected rate of return on plan assets = 8%
therefore
expected return on the plan assets = 8% × $530000
expected return on the plan assets = 0.08 × $530000
expected return on the plan assets = $42400
The pension expense for the year can be determined by the formula:
pension expense = service cost + interest cost - expected return on plan
assets.
pension expense = $(369000 + 74000 -42400)
pension expense = $(443000 - 42400)
pension expense = $400600
