Smith, Inc -Smith's Pension Expense for 2014 Is
A)$30,000

question 16

Multiple Choice

Smith, Inc. has a pension plan with the following data available for 2014 and 2015:
$\begin{array}{lcc}&2014&2015\\\text { Service cost } & \$ 30,000 & \$ 34,000 \\\text { Interest cost } & \$ 18,000 & \$ 20,000 \\\text { Actual return on plan assets } & \$ 15,000 & \$ 21,600 \\\text { Beginning of year plan assets } & \$ 200,000 & \$ 240,000 \\\text { Settlement rate } & 8 \% & 8 \% \\\text { Expected return on plan assets } & 8 \% & 8 \%\end{array}$
-Smith's pension expense for 2014 is

• A)$30,000.
• B)$32,000.
• C)$33,000.
• D)$48,000.

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Definitions:

Capital Investment

Financial allocation towards the purchase or maintenance of long-term assets such as property, plants, and equipment, with the expectation of generating future returns.

Qualitative Characteristic

A feature used to describe or categorize non-quantitative aspects of items, events, or conditions, often used in accounting and finance to evaluate factors that are not numerically based.

Internal Rate

Often referring to the internal rate of return (IRR), it is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Capital Investment

Funds spent by a company to acquire or upgrade physical assets to further its long-term goals and operations.