Question

U.S. Metallurgical Inc. reported the following balances in its financial statements and disclosure notes at December 31, 2015.

Plan assets	$500,000
Projected benefit obligation	420,000

     U.S.M.’s actuary determined that 2016 service cost is $70,000. Both the expected and actual rate of return on plan assets are 9%. The interest (discount) rate is 5%. U.S.M. contributed $130,000 to the pension fund at the end of 2016, and retirees were paid $54,000 from plan assets. (Enter you answers in millions (i.e., 10,000,000 should be entered as 10).)

Required:

Determine the following amounts at the end of 2016:

1. Pension Expense

2. Projected Benefit Obligation

3.Plan Assets

Answer 1

Pension expense
Service cost	70000
Interest cost	21000	(420000*0.05)
Return on plan assets	-45000	(500000*0.09)
Amortization of prior service cost	0
Amortization of net loss or gain	0
Pension expense	46000
Projected Benefit Obligation
Balance, January 1	420000
Service cost	70000
Interest cost	21000
Benefits Paid	-54000
Balance, December 31	457000
Plan Assets
Balance, January 1	500000
Actual return on plan assets	45000
Contributions	130000
Benefits Paid	-54000
Balance, December 31	621000