ANSWERS ONLY:

Data regarding the defined benefit plan of Po Company follow:

Fair value of plan assets, Jan. 12,500,000

Return on plan assets600,000

Contributions to the fund800,000

Present value of defined benefit obligation, Jan. 12,000,000

Current service cost1,000,000

Benefits paid during the period300,000

Discount rate10%

Settlement price of DBO60,000

PV of DBO settled25,000

1. How much is the net benefit asset (or liability) to be recognized in the statement of financial position on January 1 of the current year?

a.(2,000,000)

b.2,500,000

c.500,000

d.665,000

2. How much is the net benefit asset (or liability) to be recognized in the statement of financial position on December 31 of the current year?

a.(2,875,000)

b.500,000

c.665,000

d.3,540,000