Bissell Company received the following reports of its defined
benefit pension plan for the current calendar year:
| PBO | Plan assets | ||||||||
| Balance, January 1 | $ | 440,000 | Balance, January 1 | $ | 256,000 | ||||
| Service cost | 198,000 | Actual return | 31,000 | ||||||
| Interest cost | 31,000 | Annual contribution | 116,000 | ||||||
| Benefits paid | (84,000 | ) | Benefits paid | (84,000 | ) | ||||
| Balance, December 31 | $ | 585,000 | Balance, December 31 | $ | 319,000 | ||||
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?
Choices are
229000
198000
203400
273000
Answer: 203400
Explanation
| Calculation of Pension Expense | |
| $ | |
| Service Cost | 198,000.00 |
| Interest cost | 31,000.00 |
| Expected return on the plan assets (256,000 x 10%) | (25,600.00) |
| Pension Expense | 203,400.00 |
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