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Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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
Transcribed Image Text:On January 1, Year One, a company started a defined benefit pension plan for
its employees. Assume that the annual service cost is $200,000. Funding is
$150,000 each January 1, beginning on January 1, Year One. The interest rate
used for discount purposes to determine the projected benefit obligation is
10 percent. Both actual and expected earnings on plan assets are 8 percent
What pension liability should this company report on its December 31, Year
Two, balance sheet?
a. $83,040
b. $105,040
c. $111,040
d. $125,040
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