Trueblu Corporation is a publicly held company that supplies tourniquets to medical emergency centers. The company maintains a noncontributory defined benefit pension plan for its employees. The Trueblu's actuary has provided the following information for the year ended December 31, 2011:

Prior contributions to the defined benefit pension plan equaled the amount of net periodic pension cost accrued for the previous year end. If no contributions have been made for 2011 pension cost, what amount should Trueblu report in its December 31, 2011, balance sheet for accrued pension cost?

Question

Trueblu Corporation is a publicly held company that supplies tourniquets to medical emergency centers. The company maintains a noncontributory defined benefit pension plan for its employees. The Trueblu's actuary has provided the following information for the year ended December 31, 2011:

Prior contributions to the defined benefit pension plan equaled the amount of net periodic pension cost accrued for the previous year end. If no contributions have been made for 2011 pension cost, what amount should Trueblu report in its December 31, 2011, balance sheet for accrued pension cost?

Quizplus · Accepted Answer

Accrued pension cost equals the net periodic pension cost for the current year end (2011) minus the prior contributions made for the current year (2011).
Net periodic pension cost for 2011 = $460,000
Prior contributions made for 2011 = $218,000
Accrued pension cost = $460,000 - $218,000 = $242,000. Therefore, the correct answer is B.

Trueblu Corporation Is a Publicly Held Company That Supplies Tourniquets