Randel, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2008.
Accounting for Compensation 16 - 15
The service cost component of pension expense for 2008 is $360,000 and the amortization of prior service cost due to an increase in benefits is $60,000. The settlement rate is 10% and the expected rate of return is 9%. What is the amount of pension expense for 2008?
A) $360,000
B) $522,000
C) $531,000
D) $432,000

Question

Randel, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2008.
 Accounting for Compensation 16 - 15
 The service cost component of pension expense for 2008 is $360,000 and the amortization of prior service cost due to an increase in benefits is $60,000. The settlement rate is 10% and the expected rate of return is 9%. What is the amount of pension expense for 2008?
A) $360,000 
B) $522,000 
C) $531,000 
D) $432,000

Quizplus · Accepted Answer

$360,000 + $60,000 + ($4,800,000 × .10) - ($4,200,000 × .09) = $522,000.