Logan Corp The Market-Related Asset Value Equals the Fair Value of Plan

question 49

Multiple Choice

Logan Corp., a company whose stock is publicly traded, provides a noncontributory defined-benefit pension plan for its employees. The company's actuary has provided the following information for the year ended December 31, 2015: $$\begin{array} { l r } \text { Projected benefit obligation } & \$ 700,000 \\\text { Accumulated benefit obligation } & 525,000 \\\text { Fair value of plan assets } & 825,000 \\\text { Service cost } & 240,000 \\\text { Interest on projected benefit obligation } & 24,000 \\\text { Amortization of prior service cost } & 60,000 \\\text { Expected and actual return on plan assets } & 82,500\end{array}$$ The market-related asset value equals the fair value of plan assets. No contributions have been made for 2015 pension cost. In its December 31, 2015 balance sheet, Logan should report a pension asset / liability of

• A) Pension liability of $700,000
• B) Pension asset of $825,000
• C) Pension asset of $125,000
• D) Pension liability of $525,000

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Definitions:

Legal Authority

The power or right given to an individual or organization to perform certain actions based on legal or official rules.

Bureaucracies

Complex organizations structured through fixed hierarchical levels and formal rules, typically found in governments and large corporations.

Small-Batch Production

A manufacturing process that produces small quantities of items to meet specific customer demands or to produce unique items.

Custom Products

Goods that are tailored or personalized to meet the specific preferences or requirements of a customer.