Kraft, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2015. $$\begin{array} { l r }
\text { Service cost } & 230,000 \
\text { Contributions to the plan } & 220,000 \
\text { Actual return on plan assets } & 180,000 \
\text { Projected benefit obligation (beginning of year) } & 2,400,000 \
\text { Fair value of plan assets (beginning of year) } & 1,600,000
\end{array}$$ The expected return on plan assets and the settlement rate were both 10%. The amount of pension expense reported for 2015 is

Question

Kraft, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2015. $$\begin{array} { l r } 
\text { Service cost } & 230,000 \
\text { Contributions to the plan } & 220,000 \
\text { Actual return on plan assets } & 180,000 \
\text { Projected benefit obligation (beginning of year) } & 2,400,000 \
\text { Fair value of plan assets (beginning of year) } & 1,600,000
\end{array}$$ The expected return on plan assets and the settlement rate were both 10%. The amount of pension expense reported for 2015 is

Quizplus · Accepted Answer

Pension expense = Service cost + Interest cost - Expected return on plan assets + Gain or loss= 230,000 + (2,400,000 * 10%) - (1,600,000 * 10%) + 0= 230,000 + 240,000 - 160,000 + 0= $310,000

Kraft, Inc The Expected Return on Plan Assets and the Settlement Rate