The Following Information Is Related to the Defined Benefit Pension

question 19

Essay

The following information is related to the defined benefit pension plan of Xavier Company for 2012:
$\begin{array}{lr}\text { Service cost } & \$ 60,000 \\\text { Contributions to pension plan } & 142,400 \\\text { Benefits paid to retirees } & 150,000 \\\text { Plan assets (fair value), January 1 } & 740,000 \\\text { Plan assets (fair value), December 31 } & 850,000 \\\text { Unamortized Prior Service Cost, January 1 } & 160,000 \\\text { Unamortized Prior Service Cost, December 31 } & 110,000 \\\text { Actual return on plan assets } & 150,000 \\\text { PBO, January 1 } & 900,000 \\\text { PBO, December } 31 & 960,000 \\\text { ABO, December } 31 & 890,000 \\\text { Discount rate } & 10 \% \\\text { Long-term expected return on plan assets } & 9 \%\end{array}$
Required:
1. Using the above information calculate pension expense for $2012 ?$
2. Will it be necessary for the company to report a minimum pension liability at Dec. 31 , 2012? If so what is the amount.

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Definitions:

Ordinary Gain

A gain resulting from the sale or exchange of assets that are not capital assets, taxed at ordinary income tax rates.

Profit

The amount of revenue that remains after deducting the expenses, taxes, and costs associated with generating that revenue.

Operating Leases

Leases where the lessor retains substantial risks and rewards of ownership of the asset while leasing it to the lessee.

Note Disclosure

Informative notes accompanying financial statements, explaining the basis of preparation and detailing specific accounting policies.