Question #1.

(10 marks)

Current salary$80,000

Years until retirement3

Annual compensation increases5%

Discount rate8%

Benefit2%

Required:

a.Construct the pension table (8 marks)

Pension Table

Year

Salary

EPS Contribution at full salary

EPS Contribution at 15,000 ceiling

1

80,000

6,664

15,000

2

84,000

6,997

15,000

3

88,200

7,347

15,000

b.Compute the pension expense reported on year 2 income statement if the return on pension assets (pension income) is $120 ever year. (2 marks)