Harvey Hotels has provided a defined benefit pension plan for its employees for several years. At the end of the most recent year, the following information was available with regard to the plan: service cost: $6.2 million, expected return on plan assets: $1.2 million, actual return on plan assets: $1 million, interest cost: $1.4 million, payments to retired employees: $2 million, and amortization of prior service cost (created when the pension plan was amended causing a drop in the projected benefit obligation): $1.1 million. What amount should Harvey Hotels report as pension expense in its income statement for the year?

Question

Quizplus · Accepted Answer

$\begin{array}{lr}
\$ \text { in millions } \
\text { Service cost } & \$ \quad 6.2 \
\text { Interest cost } & 1.4 \
\text { Expected return on plan assets } & (1.2) \
\text { Amortization of PSC } & 1.1 \
\text { Pension expense } & \$ 7.5
\end{array}$

Harvey Hotels Has Provided a Defined Benefit Pension Plan for Its