Question

Lerchman Corp sponsors a defined-benefit pension plan for its employees. The company's actuary has provided the following information for the year ended December 31, 2022:

Projected benefit obligation                                                 $730,000

Fair value of plan assets                                                        860,000

Service cost                                                                              240,000

Interest on projected benefit obligation                                  24,000

Amortization of prior service cost                                            60,000

Expected and actual return on plan assets                           82,500

The plan paid benefits of $150,000. The market-related asset value equals the fair value of plan assets. No contributions have been made for 2022 pension cost. If Lerchman prepared a Pension Worksheet for 2022, the Plan Assets column would be increased by

A)$150,000

B)$130,000

C)$82,500

D) Cannot be determined from the information provided

Answer 1

Change in Pension Plan Assets = Beginning balance of Plan assets + Actual return on plan assets + Contribution made to the Plan assets - Payment made from plan assets.

In the question given the contribution made to the plan assets is zero and the fair value and the market value of the plan assets is same therefore the plan asset will be:-

= $ 8,60,000(Fair value of plan assets) + $ 82,500 (Excepted and actual return) - $ 1,50,000 (Paid)

= $ 7,92,500

if the above options are correct 100% the the answer would be (c) $ 82,500