Harms Inc. reported in its 2011 annual report the following information:

Instructions

A. Compute the net pension expense to be recorded in the income statement?

B. Determine whether the plan is over or underfunded and explain why?

Plan Status: December 31. 2011 $9,000,000 7,000,000 8,000,000 200,000 300,000 Accumulated benefit obligation (ABO) Projected benefit obligation (PBO) Plan assets (at fair value) Unamortized prior service cost Unamortized transition asset Related assumptions: Service cost expected on to be 10% of PBO Unamortized prior service cost to be amortized over 20 vears Unamortized prior transition asset to be amortized over 20 vears Actual rate of return on plan assets Discount rate Expected rate of return on plan assets Compensation growth 15% 8% 10% 5% Plan Status: December 31. 2011 $9,000,000 7,000,000 8,000,000 200,000 300,000 Accumulated benefit obligation (ABO) Projected benefit obligation (PBO) Plan assets (at fair value) Unamortized prior service cost Unamortized transition asset Related assumptions: Service cost expected on to be 10% of PBO Unamortized prior service cost to be amortized over 20 vears Unamortized prior transition asset to be amortized over 20 vears Actual rate of return on plan assets Discount rate Expected rate of return on plan assets Compensation growth 15% 8% 10% 5%