Part 1 - Pensions 2. Suppose at the end of Year O the PBO is $90 and the plan assets are $95. There is a $5 debit balance in accumulated other comprehensive income for unexpected gains and losses Year 1: - Service cost of $25 - Settlement rate = expected return =10% - Actual return is $12 - The firm contributed $40 - The plan paid benefits to retirees of $10. Year 2: - On January 1 , the firm increased its retirement benefit increasing the PBO for employees already in the plan by $40. - Service Cost of $50 - Settlement rate = expected return =10% - Actual return is $20 - The firm contributed $80 - Amortization of prior service cost was $5 - The plan paid benefits to retirees of $15. - The actuary estimates the PBO to be $230 at year end For each of the two years, calculate the total pension expense for the year and tr amount reported as pension liability/asset (20 points)