Gordon Inc.has a defined benefit plan for its employees.The following information relates to this plan: There was no unrecognized prior service cost or unrecognized gains or losses.Gordon's net periodic pension cost for the year was

Question

Gordon Inc.has a defined benefit plan for its employees.The following information relates to this plan:  There was no unrecognized prior service cost or unrecognized gains or losses.Gordon's net periodic pension cost for the year was

Quizplus · Accepted Answer

Since there is no unrecognized prior service cost or unrecognized gains or losses, the net periodic pension cost would be equal to the service cost plus interest cost, minus expected return on plan assets. From the given information, the service cost was $1,000,000, interest cost was $880,000, and expected return on plan assets was $112,000. Therefore, the net periodic pension cost for the year would be $968,000 ($1,000,000 + $880,000 - $112,000).