Exhibit 20-3 the Grace Company Adopted a Defined Benefit Pension

Exhibit 20-3 The Grace Company adopted a defined benefit pension plan on January 1, 2010, and prior service credit was granted to employees.The present value of those benefits was calculated to be $1, 351, 800 at that date.The service cost is funded in full at the end of each year, plus an additional amount of $220, 000 is funded each year-end.The unrecognized prior service cost is being amortized by the straight-line method over the remaining 10-year service life of the company's active employees.Additional information relating to the company's pension plan is presented below:
$\begin{array}{lll}&2010&2011\\\text { Service cost (annual) } & \$ 95,000 & \$ 105,000 \\\text { Unrecogrized prior service cost } & & \\\text { amortization } & 135,180 & 135,180 \\\text { Interest cost } & 10 \% & 10 \% \\\text { Expected (and actual) return on plan assets } & 10 \% & 10 \%\end{array}$

- Refer to Exhibit 20-3.What is the correct balance in Prepaid/Accrued Pension Cost at December 31, 2010?

A) $ 84, 820 debit
B) $ 50, 360 credit
C) $1, 266, 980 credit
D) none of these