Scallion Company received the following reports of its defined benefit pension p

Question

Scallion Company received the following reports of its defined benefit pension plan for the current calendar year:

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?

$197,000.

$227,000.

$172,000.

$202,000

PBO Plan assets Balance, January 1 $400,000 Balance, January 1 $250,000 Service cost 195,000 Actual return 30,000 Interest cost 32,000 Annual contribution 110,000 Benefits paid    (80,000) Benefits paid     (80,000) Balance, December 31   $547,000 Balance, December 31    $310,000

Explanation / Answer

Answer) Components of Pension Fund Pension Expense : Employers who provide a pension plan must calculate and disclose plan assets and liabilities on an income statement. To Calculate a pension expense,the employer must report the service and interest cost,expected return on plan assets,amortization of prior service cost and effects of gain and losses. Scallion Company Pension Expense for the year Service Cost 195000 Interest Cost 32000 Expected Return on plan assets -25000 Pension Expense 202000

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