A company has a defined benefit pension asset of $1,300,000 at the beginning of the year. The company contributes $4,000,000 to the pension during the year and records a pension expense of $6,200,000. The closing balance of the defined benefit pension plan at year-end is therefore a:

Question

Quizplus · Accepted Answer

The closing balance is calculated by taking the opening balance, adding contributions, and subtracting pension expense: $1,300,000 + $4,000,000 - $6,200,000 = -$900,000. A negative balance indicates a liability, hence a $900,000 liability.

A Company Has a Defined Benefit Pension Asset of $1,300,000