The following information relates to the defined benefit pension plan of the McDonald Company for the year ending December 31, 2011:

The net periodic pension cost reported in the income statement for 2011 would be

Question

The following information relates to the defined benefit pension plan of the McDonald Company for the year ending December 31, 2011:

The net periodic pension cost reported in the income statement for 2011 would be

Quizplus · Accepted Answer

The net periodic pension cost for the year includes the service cost of $24,000, the interest cost of $27,500, the expected return on plan assets of -$13,000 (since the actual return was lower than expected), the amortization of prior service cost of $2,000, and the amortization of the net gain or loss of $16,000. Therefore, the total net periodic pension cost for the year ending December 31, 2011 would be $36,500 ($24,000 + $27,500 - $13,000 + $2,000 + $16,000).

The Following Information Relates to the Defined Benefit Pension Plan