Simple Computation of Pension Expense
Refer to Practice 17 8. Compute pension expense for the year.
Practice 17 8
Simple Computation of the Net Pension Asset or Liability
On January 1 of Year 1, the company had a projected benefit obligation (PBO) of $10,000 and a pension fund with a fair value of $9,200. There was no unrecognized prior service cost, nor were there deferred pension gains or losses. The following information relates to the pension plan during the yea
Service cost |
$1,200 |
Actual return on the pension fund |
$250 |
Benefits paid to retirees |
$100 |
Contribution to the pension fund |
$1,050 |
Discount rate for PBO |
9% |
Expected return on pension fund |
10% |
Compute (1) the pension related amount that should be reported on the company’s balance sheet on January 1 of Year 1, (2) the PBO as of December 31, and (3) the fair value of the pension fund as of December 31.