Pharoah Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following
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Question:
Pharoah Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan.
| Plan assets | $1,710,000 | |
| Projected benefit obligation | 1,995,000 | |
| Pension liability | 285,000 | |
| Prior service cost | 246,000 |
As a result of the operation of the plan during 2020, the following additional data are provided by the actuary.
| Service cost for 2020 | $135,000 | |
| Settlement rate, 6% | ||
| Actual return on plan assets in 2020 | 112,000 | |
| Amortization of prior service cost | 24,000 | |
| Expected return on plan assets | 165,000 | |
| Unexpected gain from change in projected benefit obligation, due to change in actuarial predictions | 215,000 | |
| Contributions in 2020 | 148,000 | |
| Benefits paid retirees in 2020 | 180,000 |
Using the data above, compute pension expense for Pharoah for the year 2020 by preparing a pension worksheet.
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