The following information is in regard to Saverio Corp.'s defined benefit pension plan, which is accounted for using the immediate recognition approach:
Defined benefit obligation, 1/1/14 (before amendment) .....$176,000
Plan assets, 1/1/14...................................................155,000
Discount rate and expected return on fund assets..................10%
Annual pension service cost.........................................13,000
Actual return on plan assets..............................................5%
On January 1, 2014, the company amended its pension plan, which resulted in additional prior service benefits being granted to current employees. The present value of the prior service benefits is $34,000, and the employees are expected to provide future benefits over the next seven years as a result of the pension change. Saverio follows IFRS.
Instructions
Calculate the pension expense that will be reported in net income for 2014.