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24 June, 10:31

The projected benefit obligation was $260 million at the beginning of the year. Service cost for the year was $30 million. At the end of the year, pension benefits paid by the trustee were $16 million and there were no pension-related other comprehensive income accounts requiring amortization. The actuaries discount rate was 5%. The actual return on plan assets was $15 million although it was expected to be only $14 million. What was the pension expense for the year

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  1. 24 June, 13:38
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    The pension expense for the year is $29 million.

    Explanation:

    The expense is arrived by adding service of cost to interest cost less expected return on plan assets. Thereafter, amortization of prior service cost is deducted as shown below:

    Service Cost $30

    Interest Cost ($260 million*5%) $13

    Expected return on plan assets ($15 actual, $1 Gain) ($14)

    Amortization of prior service cost 0

    Amortization of net loss (gain) 0

    Pension Expense $29
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