Question

Cullumber Company provides the following information about its defined benefit pension plan for the year 2017. Service cost $ 90,500 Contribution to the plan 103,300 Prior service cost amortization 10,300 Actual and expected return on plan assets 62,800 Benefits paid 39,700 Plan assets at January 1, 2017 642,100 Projected benefit obligation at January 1, 2017 712,900 Accumulated OCI (PSC) at January 1, 2017 148,800 Interest/discount (settlement) rate 9 % Compute the pension expense for the year 2017.

Answer 1

Answer:

$102,080

Explanation:

Given that,

Service cost = $90,500

Interest rate = 9 %

Expected return on plan assets = $62,800

Prior service cost amortization = $10,300

Projected benefit obligation at January 1, 2017 = $712,900

Pension expense for the year 2017:

= Service cost + Interest cost - Expected return on plan assets + Prior service cost amortization

= $90,500 + ($712,900 × 9%) - $62,800 +  $10,300

= $90,500 + $64,080 - $62,800 +  $10,300

= $102,080