The following information is related to the defined benefit pension plan of Simpson Company for the year:

Question:

Service cost.......................................................$90,000

Contribution to pension plan............................140,000

Benefits paid to retirees....................................110,000

Plan assets (fair value) 1/1...............................540,000

Plan assets (fair value) 12/31...........................650,000

Actual return on plan assets..............................80,000

PBO, 1/1...........................................................800,000

PBO, 12/31.......................................................870,000

Settlement Discount rate........................................10%

Long-term expected return on plan assets.............9%

Assuming no other relevant data exist, what is the pension expense for the year?

a. $90,000

b. $230,600

c. $121,400

d. $154,000

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...