The following information is related to the defined benefit pension plan of Drea

Question

The following information is related to the defined benefit pension plan of Dreamworld Company for
the year:
Service cost $60,000
Contributions to pension plan 110,000
Benefits paid to retirees 150,000
Plan assets (fair value), January 1 640,000
Plan assets (fair value), December 31 750,000
Actual return on plan assets 150,000
PBO, January 1 900,000
PBO, December 31 960,000
Discount rate 10%
Long-term expected return on plan assets 9%

Assuming no other relevant data exist, what is the pension expense for the year?

A. $190,000
B. $92,400
C. $170,000
D. $60,000

Explanation / Answer

Service cost -> $60,000

Interest cost($900000*10%) ->$90000

Expected return on plan asset( $640000*9%) ->($57600)   

Pension expense $92400

Note:For expected return calculation basis is Long-term expected return on plan assets 9% and Planed asset january 1 is the take into calculation

2. For interest calculation discount rate and PBO on january is take into concideration

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