Downing, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2008.
The service cost component of pension expense for 2008 is $840,000 and the amortization of unrecognized prior service cost is $180,000. The settlement rate is 10% and the expected rate of return is 8%. What is the amount of pension expense for 2008?
A) $1,716,000
B) $1,680,000
C) $1,608,000
D) $1,440,000

Question

Downing, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2008.
 The service cost component of pension expense for 2008 is $840,000 and the amortization of unrecognized prior service cost is $180,000. The settlement rate is 10% and the expected rate of return is 8%. What is the amount of pension expense for 2008?
A) $1,716,000 
B) $1,680,000 
C) $1,608,000 
D) $1,440,000

Quizplus · Accepted Answer

$840,000 + ($11,400,000 × .10) - ($6,000,000 × .08) + $180,000 = $1,680,000