Textbook Problem

Several years ago, Lewad Company established a defined benefit pension plan for its employees. The following information is available for 2019 in regard to its pension plan: (1) discount rate, 10%; (2) service cost, $142, 000; (3) plan assets (1/1), $659, 000; and (4) expected return on plan assets, $65, 900. There is no amortization of prior service cost, and there is no gain or loss. On December 31, 2019, Lewad contributed $143, 000 to the pension plan, resulting in a credit to Accrued/Prepaid Pension Cost of $8, 200.

Required:

1. 1. Compute the amount of Lewad’s projected benefit obligation on January 1, 2019.
2. 2. Next Level How would a decrease in the discount rate affect Lewad’s pension expense?