Problem on expected rate of return on plan assets

Reference no: EM13138541

Jenny's Hula Hoop Service rents classroom motivational tools to professors at major universities. Jenny's began 2007 with a projected benefit obligation of $2,400,000 and plan assets of $2,400,000. They had no unrecognized prior service cost, no unrecognized gains or losses, and no balance sheet accruals relating to pension assets or liabilties. The company uses a discount rate of 10% in determining the PBO and has an expected rate of return on plan assets of 8%. The actuary has indicated that the service cost for 2007 will be $350,000. The company contributed $450,000 to its pension fund on the last day of the year. During the year, the pension fund earned $192,000 and paid out benefits of $430,000. Given these facts, determine (a) Interest cost, (b) expected return on plan assets, (c) pension expense, (d) ending PBO, (e) ending plan assets, and (f) pension asset/ liability.

How would your answers to the above questions differ if Jenny's had an actual return on plan assets of $206,000?

Reference no: EM13138541

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