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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Pinecone Company has plan assets of $500,000 at the beginning of the current year and expects to earn 12% on its plan assets during the year. Pinecone’s service cost is $230,000, and its interest cost is $55,000. Compute Pine-cone’s pension expense for the current year.

To determine

Calculate the pension expense of Company P for the current year.

Explanation

Pension plan: Pension plan is the plan devised by corporations to pay the employees an income after their retirement, in the form of pension.

Calculate the pension expense of Company P for the current year as follows:

ParticularsAmount
Service cost$230,000
Add: Interest cost$55,000
Less: Expected return on plan assets (1)$60,000
    Pension expense$225,000

Table (1)

Working note (1):

Calculate the expected return on plant assets...

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