The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are presented below ($ in millions): Information Provided by Pension Plan Actuary: Projected benefit obligation as of December 31, 2023 = $1,800. Prior service cost from plan amendment on January 2, 2024 = $400 (straight-line amortization for 10-year average remaining service period). Service cost for 2024 = $520. Service cost for 2025 = $570. Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10%. Payments to retirees in 2024 = $380. Payments to retirees in 2025 = $450. No changes in actuarial assumptions or estimates. Net gain—AOCI on January 1, 2024 = $230. Net gains and losses are amortized for 10 years in 2024 and 2025. Information Provided by Pension Fund Trustee: Plan asset balance at fair value on January 1, 2024 = $1,600. 2024 contributions = $540. 2025 contributions = $590. Expected long-term rate of return on plan assets = 12%. 2024 actual return on plan assets = $180. 2025 actual return on plan assets = $210. Calculate pension expense for 2024 and 2025. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). ($ in millions) 2024 2025 Service costselected answer correct $520.0 $570.0 Interest on PBOselected answer correct 220.0 256.0 Expected returnselected answer correct (192.0) ? Amortization of prior service costselected answer correct 40.0 40.0 Amortization of net gainselected answer correct (5.0) ? not attempted Pension expense $583.0 $
The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are presented below ($ in millions): Information Provided by Pension Plan Actuary: Projected benefit obligation as of December 31, 2023 = $1,800. Prior service cost from plan amendment on January 2, 2024 = $400 (straight-line amortization for 10-year average remaining service period). Service cost for 2024 = $520. Service cost for 2025 = $570. Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10%. Payments to retirees in 2024 = $380. Payments to retirees in 2025 = $450. No changes in actuarial assumptions or estimates. Net gain—AOCI on January 1, 2024 = $230. Net gains and losses are amortized for 10 years in 2024 and 2025. Information Provided by Pension Fund Trustee: Plan asset balance at fair value on January 1, 2024 = $1,600. 2024 contributions = $540. 2025 contributions = $590. Expected long-term rate of return on plan assets = 12%. 2024 actual return on plan assets = $180. 2025 actual return on plan assets = $210. Calculate pension expense for 2024 and 2025. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). ($ in millions) 2024 2025 Service costselected answer correct $520.0 $570.0 Interest on PBOselected answer correct 220.0 256.0 Expected returnselected answer correct (192.0) ? Amortization of prior service costselected answer correct 40.0 40.0 Amortization of net gainselected answer correct (5.0) ? not attempted Pension expense $583.0 $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are presented below ($ in millions):
Information Provided by Pension Plan Actuary:
- Projected benefit obligation as of December 31, 2023 = $1,800.
- Prior service cost from plan amendment on January 2, 2024 = $400 (straight-line amortization for 10-year average remaining service period).
- Service cost for 2024 = $520.
- Service cost for 2025 = $570.
- Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10%.
- Payments to retirees in 2024 = $380.
- Payments to retirees in 2025 = $450.
- No changes in actuarial assumptions or estimates.
- Net gain—AOCI on January 1, 2024 = $230.
- Net gains and losses are amortized for 10 years in 2024 and 2025.
Information Provided by Pension Fund Trustee:
- Plan asset balance at fair value on January 1, 2024 = $1,600.
- 2024 contributions = $540.
- 2025 contributions = $590.
- Expected long-term
rate of return on plan assets = 12%. - 2024 actual return on plan assets = $180.
- 2025 actual return on plan assets = $210.
-
Calculate pension expense for 2024 and 2025.
Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).
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