Carlton Co.provides the following information about its Pension plan for the year 2012.
Based on this information, what is the Pension expense for 2012?

Question

Quizplus · Accepted Answer

The pension expense for the year 2012 is the sum of service cost, interest cost, and expected return on plan assets minus actual return on plan assets, plus/minus any gains or losses from amendments or curtailments.

Service cost = £80,000 
Interest cost = (7% x £800,000) = £56,000 
Expected return on plan assets = (8% x £800,000) = £64,000 
Actual return on plan assets = (£750,000 - £700,000) = £50,000 
Gain on curtailment = £10,000

Using the formula, 
Pension expense = £80,000 + £56,000 - £64,000 - £50,000 + £10,000 
Pension expense = £32,000

Therefore, the option D (£106,800) is incorrect. The correct option is D (£32,000).