Refer to the data in TR19-9 and related solution for the opening balances. For 20X5, the following information is provided. The market yield rate for high-quality corporate bonds of similar term and identical currency is 5.5% at the end of the year. On 1 April 20X5, a contribution of $560,000 was made to the plan assets. Pension payments to pensioners are made evenly over the year and totalled $230,000.

Data From TR19-9

USLM Inc. has a defined benefit pension plan. At the end of the year 20X4, the pension fund assets were $7,670,000 and the defined benefit obligation was $7,250,000. Invoking the asset ceiling caps the net defined benefit asset at $315,000.

Required:
Calculate and record the second element of pension accounting for the defined benefit plan. That is, calculate net interest cost, and prepare the entry to record interest cost.
Calculate the three components of net interest:
• Interest on the defined benefit obligation
• Interest on fund assets (using the DBO discount rate)
• Interest on the effect of asset ceiling