Use the Following Information for Questions

question 2

Multiple Choice

Use the following information for questions
The following data are for the pension plan for the employees of Lockett Company.
Lockett's contribution was $1,260,000 in 2016 and benefits paid were $1,125,000.Lockett
estimates that the average remaining service life is 15 years.
-The actual return on plan assets in 2016 was

• A)$900,000.
• B)$765,000.
• C)$600,000.
• D)$465,000.

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Definitions:

Average Operating Assets

An average value of the assets used in the regular operations of a business over a specific period.

Net Operating Income

A measure of a company's profitability, calculated as the difference between its total revenue and operating expenses, excluding taxes and interest.

Return On Investment

A financial ratio used to calculate the profitability of an investment, comparing the gain from an investment relative to its cost.

Residual Income

The income that remains after subtracting from the net operating income the cost of capital charged for utilizing the capital in generating the net operating income.