Question

Exercise 20-2

Vaughn Company provides the following information about its defined benefit pension plan for the year 2017.

Service cost		$ 88,500
Contribution to the plan		107,100
Prior service cost amortization		10,600
Actual and expected return on plan assets		63,100
Benefits paid		40,800
Plan assets at January 1, 2017		648,000
Projected benefit obligation at January 1, 2017		688,100
Accumulated OCI (PSC) at January 1, 2017		148,600
Interest/discount (settlement) rate		11	%

Compute the pension expense for the year 2017.

Pension expense for 2017

$

Answer 1

Pension expense for 2017 $ 111,691 Working Notes: Computation of pension expenses Particulars Service cost Interest cost Actual and Expected return on plan assets Prior service cost amortization Pension Expenses Amount($) $ 88,500 $ 75,691 $ (63,100) $ 10.600 $ 111,691 Interest cost = $688,100*11% = $75,691