How much is the gain or loss on settlement

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Question - ValixAta Company reported the following information on its pension liability as of January 1, 2020:

Plan assets at fair value 4,000,000

Defined benefit obligation at present value 5,500,000

Pension asset/(liability) (1,500,000)

The transactions during 2020 are as follows:

Current service costs 800,000

Past service costs 200,000

Actual return on plan assets 300,000

Contributions made by the employer 700,000

Settlement price of defined benefit obligation 500,000

Present value of defined benefit obligation settled 400,000

Discount rate of treasury bonds 8%

Expected return on plan assets 5%

Question 1: How much is the gain or loss on settlement?

a. 100,000 gain

b. 200,000 loss

c. 100,000 loss

d. 200,000 gain

Question 2: What the pension asset/(liability) as of December 31, 2020?

a. 2,000,000

b. 1,620,000

c. 2,040,000

d. 2,075,000

Reference no: EM132949751

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