Danielle Company Adopted a Defined Benefit Pension Plan on January

question 35

Multiple Choice

Danielle Company adopted a defined benefit pension plan on January 1, 2010, and prior service credit was granted to employees.The present value of that prior service obligation as of January 1, 2010 was $1, 400, 000 and is being amortized by the straight-line method over the remaining 20-year service life of the company's active employees.Additional information relating to the company's pension plan for 2010 is presented below: $\begin{array}{ll}\text { Annual service cost } & \$ 132,000 \\\text { Contribution to the plan (December } 31,2010) & 390,000 \\\text { Interest cost } & 10 \% \\\text { Expected (and actua) return on plan assets } & 12 \%\end{array}$
What amount should be recorded in Prepaid/Accrued Pension Cost when recording the 2010 pension expense and funding at December 31, 2010?

• A)$ 1, 200 credit
• B)$48, 000 credit
• C)$87, 000 credit
• D)$94, 800 credit

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