Spath Company adopted a noncontributory defined benefit pension plan on January 1, 2019. Spath uses the benefit/years-of-service method, which results in the following information: 2019 2020 Service cost $300,000 $450,000 Amount funded 240,000 390,000 Discount rate 10% 10% Expected rate of return 10% 10% The actual rate of return is equal to the expected return, and the company has not made any payments to retirees. As of December 31, 2020, what is the balance in the pension plan asset fund? a.$840,000 b.$456,000 c.$654,000 d.$630,000
Spath Company adopted a noncontributory defined benefit pension plan on January 1, 2019. Spath uses the benefit/years-of-service method, which results in the following information: 2019 2020 Service cost $300,000 $450,000 Amount funded 240,000 390,000 Discount rate 10% 10% Expected rate of return 10% 10% The actual rate of return is equal to the expected return, and the company has not made any payments to retirees. As of December 31, 2020, what is the balance in the pension plan asset fund? a.$840,000 b.$456,000 c.$654,000 d.$630,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Defined Benefit Pension Plan
Spath Company adopted a noncontributory defined benefit pension plan on January 1, 2019. Spath uses the benefit/years-of-service method, which results in the following information:
| 2019 | 2020 | |
| Service cost | $300,000 | $450,000 |
| Amount funded | 240,000 | 390,000 |
| Discount rate | 10% | 10% |
| Expected |
10% | 10% |
The actual rate of return is equal to the expected return, and the company has not made any payments to retirees.
As of December 31, 2020, what is the balance in the pension plan asset fund?
a.$840,000
b.$456,000
c.$654,000
d.$630,000
Answer: C
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