The following information is in regards to Saverio Corp.’s defined benefit pension, which is accounted for with the immediate recognition approach.
Accrued benefit obligation, funding basis, 1/1/11 (before amendment) ..$176,000
Plan assets, 1/1/11.........................155,000
Discount rate...........................10%
Annual pension service cost.....................13,000
Actual return on plan assets........................5%
Expected return on plan assets .....................9%
On January 1, 2011, the company amended its pension plan, which resulted in additional prior service benefits being granted to current employees. The present value of the prior service benefits is $34,000, and the employees are expected to provide future benefits over the next seven years as a result of the pension change.
Instructions
Calculate the pension expense for 2011.