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Question 2 (3 points—25 minutes)

 

The following information pertains to A&E Co.’s defined benefit pension plan for the year 2013.

Projected benefit obligation at 1/1/2013	$600,000
Fair value of pension plan assets 1/1/2013	420,000
Unrecognized prior service costs at 1/1/2013	240,000
Service cost	80,000
Amortization of prior service costs	20,000
Contributions to the plan	40,000
Benefits paid	15,000
Actual and expected return on plan assets	6%
Interest/discount rate used	6 %

a.       Show calculations to compute the pension expense for 2013.

b.       Show calculations to compute the ending balance of the projected benefit obligation at 12/31/2013.

c.        Show calculations to compute the ending balance of the plan assets at 12/31/2013.