Use the same set of facts as in P15-5. In addition, assume that based on ERISA rules, Magee Corporation must contribute the following amounts to the pension fund:

Magee intends to fund the pension plan only to the extent required by ERISA rules. Assume that the contributions to the pension fund earn exactly a 10% rate of return annually.

Required:

1. The CEO of the company, Reece Magee, is considering three possible discount rates (8%, 10%, and 12%) for calculating the annual pension expense. Provide schedules showing how much pension expense will be reported under each of the three scenarios during the 20X1–20X5 period.

2. Provide schedules showing the funded status of the pension plan during the 20X1–20X4 period.

3. Magee is wondering which of the three discount rate assumptions would be considered the most and least conservative for the purposes of determining net income. Prepare a schedule that shows how total pension expense compares across the three discount rate assumptions. Explain your results.

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20X1 20X2 20X3 20X4 Contributions $8,475 $11,000 $15,000 $18,000