Selected financial information for Jory Company for the current year ended 12/31
ID: 2438431 • Letter: S
Question
Selected financial information for Jory Company for the current year ended 12/31 is shown below.
Plan assets at January 1 $6,000,000
Projected benefit obligation at January 1 5,000,000
Accumulated benefit obligation at January 1 4,000,000
Interest cost 400,000
Service cost 700,000
Actual return on plan assets 500,000
Expected return on plan assets 500,000
Employer’s contribution 800,000
Benefits paid to retirees 300,000
Accrued pension cost at January 1 -0-
Jory’s net pension expense for the year ended December 31 is
a. $ 600,000
b. $ 900,000
c. $1,600,000
d. $1,900,000
Show all work including formulas.
Explanation / Answer
The correct answer is option (a) i.e. $600,000 which is calculated as below:- Net pension expenses for the year ended December 31 Current service Cost 700,000 Add : Interest cost 400,000 Less : Actual return on plan assets 500,000 Net pension expense 600,000
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