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27 May, 10:52

Pension data for Millington Enterprises include the following: ($ in millions) Discount rate, 10% Projected benefit obligation, January 1$370 Projected benefit obligation, December 31 475 Accumulated benefit obligation, January 1 310 Accumulated benefit obligation, December 31 425 Cash contributions to pension fund, December 31 160 Benefit payments to retirees, December 31 56 Required: Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the year ended December 31.

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  1. 27 May, 11:12
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    The service cost component of pension expense for the year ended December 31 is $124 million

    Explanation:

    Projected benefit obligation, December 31 $475

    Less: Projected benefit obligation, January 1 - $370

    Less: Interest cost = - 37 = 370*10%

    Add: Benefit payments to retirees $56

    Service cost $124 million
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