On January 2, Luft Co. established a noncontributory defined-benefit pension pla

Question

On January 2, Luft Co. established a noncontributory defined-benefit pension plan covering all employees and contributed $400,000 to the plan. At December 31, Luft determined that the annual service and interest costs of the plan were $720,000. The expected and the actual rate of return on plan assets for the year was 10%. Luft's pension expense has no other components. What amount should Luft report in its December 31 balance sheet as a liability for pension benefits?

$280,000

$320,000

$360,000

$720,000

I do not know

$280,000

$320,000

$360,000

$720,000

I do not know

Explanation / Answer

correct option is "A"

Balance in fund = 400000+ (400000*.10) = 440000

Pension expense = 720000

Liability = 440000-720000= 280000

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.