Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2011. The provisions

| June 10, 2016

Question
P17-6 Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2011. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. A consulting firm, engaged as actuary, recommends 6% as the appropriate discount rate. The service cost is $150,000 for 2011 and $200,000 for 2012. Year-end funding is $160,000 for 2011 and $170,000 for 2012. No assumptions or estimates were revised during 2011.

Required:

Calculate each of the following amounts as of both December 31, 2011, and December 31, 2012:

1.Projected benefit obligation

2.Plan assets

3.Pension expense

4.Net pension asset or net pension liability

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