Answer:
1. The pension expense for the year is $137,690. The right answer is b
2. The expected PBO at 12/31/2017 is $1,347,300. The right answer is c
Explanation:
1. In order to calculate the pension expense for the year we would have to make the following calculation:
pension expense for the year=Service cost-expected return on plan asset+interest cost+Prior service cost amortization+Amortization of net loss
interest cost=$1,255,000×6%=$75,300
Therefore,pension expense for the year=$69,000 - $43,610 + $75,300 + 25,000 + $12,000
pension expense for the year=$137,690
The pension expense for the year is $137,690
2. In order to calculate the expected PBO at 12/31/2017 we would have to make the following calculation:
expected PBO at 12/31/2017=PBO January 1, 2017+interest cost+Service cost-Benefits paid
expected PBO at 12/31/2017=$1,255,000+$75,300+$69,000-$52,000
expected PBO at 12/31/2017=$1,347,300
The expected PBO at 12/31/2017 is $1,347,300
