5. QUESTIONS 5 THROUGH 8 ARE BASED ON TABLE 3-1. Table 3-1 Talley, Inc. Pension
ID: 2442833 • Letter: 5
Question
5. QUESTIONS 5 THROUGH 8 ARE BASED ON TABLE 3-1.
Table 3-1
Talley, Inc. Pension Plan Year 7 Year 8
Service cost 15,000 17,000
Interest cost 9,000 10,000
Actual return on plan assets 7,500 10,800
Beginning of year plan assets 100,000 120,000
Settlement rate 8% 8%
What is Talley's pension expense to be recorded for Year 7? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.)
(Points: 5)
a) $15,000
b) $16,000
c) $16,500
d) $24,000
6. What is Talley's pension expense to be recorded for Year 8? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.) (Points: 5)
a) $16,200
b) $17,000
c) $17,400
d) $27,000
7. What is Talley's deferred gain or loss from the return on plan assets for Year 7? (Points: 5)
a) $0
b) $500 deferred gain
c) $500 deferred loss
d) Unknown from information provided
8. What is Talley's deferred gain or loss from the return on plan assets for Year 8? (Points: 5)
a) $0
b) $1,200 deferred gain
c) $1,200 deferred loss
d) Unknown from information provided
Explanation / Answer
5. c)$16500 6. d)$27000 7. c)$500 deferred loss 8) b) $1200 deferred gain
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