Question
Spath Company adopted a noncontributory defined benefit pension plan on January 1, 2016. Spath uses the benefit/yearsof-service method, which results in the following information: 2016
Spath Company adopted a noncontributory defined benefit pension plan on January 1, 2016. Spath uses the benefit/yearsof-service method, which results in the following information:
2016 2017
Service Cost $300,000 $450,000
Amount funded $240,000 $390,000
Discount Rate 10% 10%
Expected Rate of Return 10% 10%
The actual rate of return is equal to the expected return, and the company has not made any payments to retirees.
In the Journal entry to record pension expense, what is the amount of the credit entry to accrued/prepaid pension costs on December 31st?
a. | 2016 2017 $0 $0 | |
b. | 2016 2017 $60,000 $60,000
| |
c. | 2016 2017 $60,000 $66,000 | |
d. | 2016 2017 $60,000 $126,000 |
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