Question

Panther Products sponsors a defined benefit pension plan. The following information pertains to that plan: Service cost for 2018 $ 480 million Actual and expected return on plan assets for 2018 105 million 2018 amortization of prior service cost 15 million Interest on pension obligation for 2018 150 million Retiree benefits paid during 2018 30 million The pension expense that Panther should report in its 2018 income statement is:

Answer 1

Answer:

$540 million

Explanation:

The computation of the pension expense i.e to be reported in the income statement is shown below:

= Service cost + interest expense on pension obligation - expected return on plan assets  + amortization of unrecognized prior service cost

= $480 million + $150 million - $105 million + $15 million

= $540 million

We simply applied the above formula so that the accurate pension expense could come