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

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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