The following information is in regards to Saverio Corp.’s defined benefit pension, which is accounted for with the immediate recognition approach

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.

Pension expense 2011:

Service cost                                 $ 13,000

Interest on ABO (10% of $210,000)                     21,000

Actual return on plan assets (5% of $155,000)  (7,750)  

Past service cost                              34,000

                                             $ 60,250