Pension data for Millington Enterprises include the following: Required: Assumin

Question

Pension data for Millington Enterprises include the following:

Required:
Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the year ended December 31.

($ in millions) Discount rate, 10% Projected benefit obligation, January 1 $ 340 Projected benefit obligation, December 31 480 Accumulated benefit obligation, January 1 315 Accumulated benefit obligation, December 31 430 Cash contributions to pension fund, December 31 165 Benefit payments to retirees, December 31 57

Explanation / Answer

Service cost = $480 - $340 - (10% × $340) + $57

Service cost = $163 million

The service cost component of pension expense for the year ended December 31 is $163 million.

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