Spath Company adopted a noncontributory defined benefit pension plan on January 1, 2016. Spath uses the benefit/years-of-service
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Question:
Spath Company adopted a noncontributory defined benefit pension plan on January 1, 2016. Spath uses the benefit/years-of-service method, which results in the following information:
| 2016 | 2017 | |
| Service cost | $300,000 | $450,000 |
| Amount funded | 240,000 | 390,000 |
| Discount rate | 10% | 10% |
| Expected rate of return | 10% | 10% |
The actual rate of return is equal to the expected return, and the company has not made any payments to retirees.
In the journal entry to record pension expense, what is the amount of the credit entry to accrue pension cost on December 31?
a.
| 2016 | 2017 | |
| $60,000 | $126,000 | |
b.
| 2016 | 2017 | |
| $60,000 | $60,000 | |
c.
| 2016 | 2017 | |
| $60,000 | $66,000 | |
d.
| 2016 | 2017 | |
| $0 | $60,000 | |
Expert Answer:
Related Book For 
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
