Question: On January 2, 2010, Loch Co. established a noncontributory defined benefit plan covering all employees and contributed $1,000,000 to the plan. At December 31, 2010,

On January 2, 2010, Loch Co. established a noncontributory defined benefit plan covering all employees and contributed $1,000,000 to the plan. At December 31, 2010, Loch determined that the 2010 service and interest costs on the plan were $620,000. The expected and the actual rate of return on plan assets for 2010 was 10%. There are no other components of Loch’s pension expense. What amount should Loch report in its December 31, 2010 balance sheet as prepaid pension cost?

a. $280,000

b. $380,000

c. $480,000

d. $620,000

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