Question

Bronks Co. had pension plan assets and PBO of $160,000 on 1/1/19. Service cost for the year was $40,000. It contributed $30,000 during the year and paid benefits of $20,000. The interest rate was 10%. The actual return was $15,000. Compute pension expense, PBO and PA at the end of the year.

Answer 1

Answer:

Pension expense:

= Service cost + Interest on PBO - actual return

= 40,000 + (10% * 160,000) - 15,000

= $41,000

PBO at end of year:

= Beginning PBO+ Service cost + Interest on PBO - Benefits paid

= 160,000 + 40,000 + (10% * 160,000) - 20,000

= $196,000

Pension Assets at end of year:

= Beginning PBO + Return + Contribution - Benefits

= 160,000 + 15,000 + 30,000 - 20,000

= $185,000