Noser Inc.shows the following data relating to its pension plan for 2014: What amount should Noser report for pension expense in 2014?

Question

Noser Inc.shows the following data relating to its pension plan for 2014:  What amount should Noser report for pension expense in 2014?

Quizplus · Accepted Answer

Pension expense for the year includes service cost, interest cost, actual return on plan assets, and amortization of prior service cost and gain/loss.

Service cost = $100,000
Interest cost = ($3,000,000 x 7%) = $210,000
Actual return on plan assets = ($3,500,000 - $3,000,000) = $500,000
Amortization of prior service cost = ($40,000 / 10) = $4,000
Amortization of gain/loss = ($50,000 - $30,000) / 10 = $2,000

Total pension expense = $100,000 + $210,000 - $500,000 + $4,000 + $2,000 = $242,000.

Therefore, the best choice is C.

Noser Incshows the Following Data Relating to Its Pension Plan for for 2014