Stanley-Morgan Industries

Stanley-Morgan Industries

Question

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.

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Required:

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

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Projected benefit obligation

Plan assets

Pension expense

Netpension asset or net pension liability