A is corrent. Pension asset/liability is the cumulative excess of the amount funded over the amount recorded as pension expense. In year 1, funding was $170,000 and the only element of pension expense which applied was service cost ($150,000), so pension asset/liability was $20,000 at 12/31/Y1. In year 2, pension expense was $162,000 as computed below.| Service cost | $165,000 | | Interest on P.B.O. | 15,000 | | Actual return on plan assets | (18,000) | | Pension expense | $162,000 |
Therefore, the year 2 funding ($185,000) exceeded pension expense ($162,000) by $23,000, increasing pension asset/liability to $43,000 ($20,000 + $23,000).B is incorrect. Pension asset/liability is the cumulative excess of the amount funded over the amount recorded as pension expense. In year 1, funding was $170,000 and the only element of pension expense which applied was service cost ($150,000), so pension asset/liability was $20,000 at 12/31/Y1. In year 2, pension expense was $162,000 as computed below.| Service cost | $165,000 | | Interest on P.B.O. | 15,000 | | Actual return on plan assets | (18,000) | | Pension expense | $162,000 |
Therefore, the year 2 funding ($185,000) exceeded pension expense ($162,000) by $23,000, increasing pension asset/liability to $43,000 ($20,000 + $23,000).C is incorrect. Pension asset/liability is the cumulative excess of the amount funded over the amount recorded as pension expense. In year 1, funding was $170,000 and the only element of pension expense which applied was service cost ($150,000), so pension asset/liability was $20,000 at 12/31/Y1. In year 2, pension expense was $162,000 as computed below.| Service cost | $165,000 | | Interest on P.B.O. | 15,000 | | Actual return on plan assets | (18,000) | | Pension expense | $162,000 |
Therefore, the year 2 funding ($185,000) exceeded pension expense ($162,000) by $23,000, increasing pension asset/liability to $43,000 ($20,000 + $23,000).D is incorrect. Pension asset/liability is the cumulative excess of the amount funded over the amount recorded as pension expense. In year 1, funding was $170,000 and the only element of pension expense which applied was service cost ($150,000), so pension asset/liability was $20,000 at 12/31/Y1. In year 2, pension expense was $162,000 as computed below.| Service cost | $165,000 | | Interest on P.B.O. | 15,000 | | Actual return on plan assets | (18,000) | | Pension expense | $162,000 |
Therefore, the year 2 funding ($185,000) exceeded pension expense ($162,000) by $23,000, increasing pension asset/liability to $43,000 ($20,000 + $23,000). |
