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Talley, Inc. Pension Plan: Pension expense for year 7 & 8

Talley, Inc. Pension Plan Year 7 Year 8
Service cost 15,000 17,000
Interest cost 9,000 10,000
Actual return on plan assets 7,500 10,800
Beginning of year plan assets 100,000 120,000
Settlement rate 8% 8%

What is Talley's pension expense to be recorded for Year 7? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.)
$15,000
$16,000
$16,500
$24,000

What is Talley's pension expense to be recorded for Year 8? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.)
$16,200
$17,000
$17,400
$27,000

What is Talley's deferred gain or loss from the return on plan assets for Year 7?
$0
$500 deferred gain
$500 deferred loss
Unknown from information provided

What is Talley's deferred gain or loss from the return on plan assets for Year 8?
$0
$1,200 deferred gain
$1,200 deferred loss
Unknown from information provided

Solution Preview

What is Talley's pension expense to be recorded for Year 7? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.)
$15,000
***$16,000
$16,500
$24,000

OTA comment:
+ service cost $15,000
+ interest cost $9,000
- expected return on assets 100,000 x 8% = 8,000
= end $16,000

What ...

Solution Summary

Your tutorial indicates the best choice and the computes the amount in detail so you can reconstruct it for yourself.

$2.19