Pension data for David Emerson Enterprises include the following:
($ in millions)
Discount rate, 10%
Projected benefit obligation, January 1 $320
Projected benefit obligation, December 31 500
Accumulated benefit obligation, January 1 335
Accumulated benefit obligation, December 31 450
Cash contributions to pension fund, December 31 185
Benefit payments to retirees, December 31 61
Required:
Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the year ended December 31.

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2021-04-01T02:48:22+02:00

Answer:

$209

Explanation:

Calculation to determine the service cost component of pension expense for the year ended December 31

Projected benefit obligation, December 31 500

Add Benefit payments to retirees, December 31 $61

Less Interest cost ($32)

(10%$320)

Less Projected benefit obligation, January 1 ($320)

Service cost $209

($500+$61-$32-$320)

Therefore the service cost component of pension expense for the year ended December 31 will be $209