Smith, Inc. has a pension plan with the following data available for 2014 and 2015:
$\begin{array}{lcc}&2014&2015\
\text { Service cost } & \$ 30,000 & \$ 34,000 \
\text { Interest cost } & \$ 18,000 & \$ 20,000 \
\text { Actual return on plan assets } & \$ 15,000 & \$ 21,600 \
\text { Beginning of year plan assets } & \$ 200,000 & \$ 240,000 \
\text { Settlement rate } & 8 \% & 8 \% \
\text { Expected return on plan assets } & 8 \% & 8 \%
\end{array}$
-The deferred gain or loss from the return on plan assets for 2015 is

Question

Quizplus · Accepted Answer

The deferred gain or loss from the return on plan assets is calculated as the difference between the actual return and the expected return on plan assets. For 2015, the expected return on plan assets is 8% of the beginning year plan assets ($240,000), which equals $19,200. The actual return was $21,600. Therefore, the difference is $21,600 - $19,200 = $2,400, which represents a deferred gain.

Smith, Inc -The Deferred Gain or Loss from the Return on Plan