Question

Bissell Company received the following reports of its defined benefit pension plan for the current calendar year: PBO Plan assets Balance, January 1 $ 410,000 Balance, January 1 $ 252,000 Service cost 191,000 Actual return 37,000 Interest cost 31,000 Annual contribution 117,000 Benefits paid (82,000 ) Benefits paid (82,000 ) Balance, December 31 $ 550,000 Balance, December 31 $ 324,000 ________________________________________ 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

Answer:

Pension expense = $196,800

Explanation:

Data

Service Cost = 191,000

Interest Cost = 31,000

Plan asset balance on january 1 = $252,000

Expected rate of return =10%

Pension expense =?

Solution

Pension expense can be calculated as follows

Pension expense = Service Cost + Interest Expense - Expected rate of return

Pension expense = $191,000 + $31,000 - ($252,000 x 10%)

Pension expense = $191,000 +$31,000 - $25,200

Pension expense = $196,800