On January 1, 2018,Gillock Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cost for each year of 2018 and 2019 was $600,000. The interest rate used to determine the projected benefit obligation is 10%. Both the actual and the expected return on plan assets are 8% for both years. Gillock funded the plan in the amount of $400,000 each January 1, beginning on January 1, 2018.
-In the income statement, companies report the service cost component of pension expense:

Question

On January 1, 2018,Gillock Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cost for each year of 2018 and 2019 was $600,000. The interest rate used to determine the projected benefit obligation is 10%. Both the actual and the expected return on plan assets are 8% for both years. Gillock funded the plan in the amount of $400,000 each January 1, beginning on January 1, 2018. 
-In the income statement, companies report the service cost component of pension expense:

Quizplus · Accepted Answer

The service cost component of pension expense is part of the total compensation costs incurred by the company for the current year. It is a current cost of providing employee benefits and is therefore reported as part of the operating expenses on the income statement. The other components of pension expense, such as interest cost, expected return on plan assets, and amortization of prior service cost or gains/losses, are reported separately and outside the subtotal of income from operations.

On January 1, 2018,Gillock Climbing Academy Instituted a Defined Benefit