Question

13.1.29. On January 2, Loch Co. established a 100- noncontributory flat-defined-benefit pension plan CESUDER covering all employees and contributed $1 million ella to the plan. At December 31, Loch determined C. $480,000 0321 that the service and interest costs of the plan were noen S620,000. The expected and the actual rate of return art on plan assets for the year was 10%, and no benefit videno payments or additional contributions were made.bns elnen Loch's pension expense has no other components. bluories What amount should Loch report in its December 31 000,00 balance sheet as a pension asset?eli ni (elnemysgeulut to Oldab 5 osinpo091 ei aieoo noianeg beoos to noto A. $280,000 000 000,0882 101 vildsil er gnidibero 101 A 000 1.000.2802 ed lliw inuous B. $380,000 nuoms en door ons (8) wana neden olvis D. $620,000 onu Otto Ort

Answer 1

Answer: C. $480,000

Explanation:
Prepaid Pension Cost / Pension Asset is the cumulative excess of the amount funded over the amount recorded as pension expense. For the given period in the question the pension expense is $520,000.

Service Cost and interest on Projected Benefit Obligation	$620,000
Actual Return on Plan Assets ($1,000,000 x 10%)	($100,000)
Pension Expense	$520,000

Since the give period funding was $1,000,000, December 31 Prepaid pension cost is $480,000 i.e. ($1,000,000 - $520,000)

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