The following information is related to the defined benefit pension plan of dreamworld company for the year: service cost $ 61,000 contributions to pension plan 111,000 benefits paid to retirees 156,000 plan assets (fair value), january 1 643,000 plan assets (fair value), december 31 750,000 actual return on plan assets 152,000 pbo, january 1 910,000 pbo, december 31 906,000 discount rate 10 % long-term expected return on plan assets 9 % assuming no other relevant data exist, what is the pension expense for the year?

The pension expense for the year is $94,130

Explanation:

The computation of the pension expense is shown below:

= Service cost + Interest cost - expected return of plant

where,

Service cost = $61,000

Interest cost = PBO, January 1 × discount rate

                     = $910,000 × 10%

                     = $91,000

Expected return on plant asset = Plan assets (fair value), January 1 × Long-term expected return on plan assets

= $643,000 × 9%

= $57,870

Now put these values to the above formula  

So, the value would equal to

= $61,000 + $91,000 - $57,870

= $94,130

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