A is corrent. Since prior contributions equaled the amount of net pension cost previously accrued, there is no pension asset/liability at 1/1/Y5. Year 5 pension expense is $121,000, as computed below.| Service cost | $120,000 | | Interest on PBO | 12,000 | | Amort. of unrec. PSC | 30,000 | | Return on plan assets | (41,000) | | Pension cost | $121,000 |
Although no year 5 contributions have been made, there is no liability at 12/31/Y5 because the plan assets exceed the PBO. Therefore, a pension plan asset of $10,000 is recognized.B is incorrect. Since prior contributions equaled the amount of net pension cost previously accrued, there is no pension asset/liability at 1/1/Y5. Year 5 pension expense is $121,000, as computed below.| Service cost | $120,000 | | Interest on PBO | 12,000 | | Amort. of unrec. PSC | 30,000 | | Return on plan assets | (41,000) | | Pension cost | $121,000 |
Although no year 5 contributions have been made, there is no liability at 12/31/Y5 because the plan assets exceed the PBO. Therefore, a pension plan asset of $10,000 is recognized.C is incorrect. Since prior contributions equaled the amount of net pension cost previously accrued, there is no pension asset/liability at 1/1/Y5. Year 5 pension expense is $121,000, as computed below.| Service cost | $120,000 | | Interest on PBO | 12,000 | | Amort. of unrec. PSC | 30,000 | | Return on plan assets | (41,000) | | Pension cost | $121,000 |
Although no year 5 contributions have been made, there is no liability at 12/31/Y5 because the plan assets exceed the PBO. Therefore, a pension plan asset of $10,000 is recognized.D is incorrect. Since prior contributions equaled the amount of net pension cost previously accrued, there is no pension asset/liability at 1/1/Y5. Year 5 pension expense is $121,000, as computed below.| Service cost | $120,000 | | Interest on PBO | 12,000 | | Amort. of unrec. PSC | 30,000 | | Return on plan assets | (41,000) | | Pension cost | $121,000 |
Although no year 5 contributions have been made, there is no liability at 12/31/Y5 because the plan assets exceed the PBO. Therefore, a pension plan asset of $10,000 is recognized. |
