Question

Pension data for Goldman Company included the following for the current calendar year: Service cost $ 100,000 PBO, January 1 750,000 Plan assets, January 1 800,000 Amortization of prior service cost 6,000 Amortization of net loss 2,000 Discount rate, 8% Expected return on plan assets, 10% Actual return on plan assets, 12% Required: Determine pension expense for the year. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Answer:

$88,000

Explanation:

The computation of the pension expense for the year is shown below:

Service Cost  $100,000

Add: Interest Cost  $60,000 ($750,000 × 8%)

Add: Amortization of prior service cost  $6,000

Add: Amortization of net loss $2,000

Less Expected return on plan assets  $80,000 ($800,000 × 10%)

Pension Expense $88,000

We simply deduct the expected return on plant assets and the other values would be added to the service cost so that the pension expense could come