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On January 1, 2018, INXS Company had the following balances: Projected benefit obligation 1,245,400 Fair value of plan assets 965,400 The settlement rate, as well as the expected return rate, is 5%
On January 1, 2018, INXS Company had the following balances:
Projected benefit obligation
1,245,400
Fair value of plan assets
965,400
The settlement rate, as well as the expected return rate, is 5%. Other data related to the pension plan for 2018 were:
Service cost
61,200
Amortization of prior service costs
13,400
Contributions
29,500
Benefits paid
36,800
Actual return on plan assets
41,900
Amortization of net gain
11,400
What was the fair value of plan assets at December 31, 2018?
What amount was recorded for pension expense for year 2018?
Expert Solution
Computation of Fair value of plan assets;
Fair value of plan asset = Opening balance of FV of plan assets + Contribution + Actual return - Benefits paid
= 965,400 + 29,500 + 41,900 - 36,800
= 1,000,000
Computation of pension expenses;
Pension expense = Service cost + Interest cost - Actual return + Amortization of prior service costs
= 61,200 + (1,245,400*5%) - 41,900 + 13,400
= 32,700 + 62,270
= 94,970
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