Reference no: EM132608783

Question - Gidget Corp. has a defined benefit pension plan for its employees. It reports its financial results in accordance with IFRS. On January 1, 20X1, the fair value of the plan assets was $3,300,000 and the present value of the defined benefit obligation was $2,800,000. In 20X1, Gidget improved the benefits payable under the pension plan. The plan's actuaries advised that the past service costs arising from this improvement were $450,000 dated back to January 1. Other information follows: Current service cost for 20X1 was $325,000.

Gidget sent $350,000 cash to the pension trust on June 30, 20X1.

The pension trust paid out $225,000 in pension benefits with the payment made on December 31, 20X1.

The plan actuaries determined that the appropriate interest rate for 20X1 was 5%.

The actual return on plan asset for 20X1 was $195,000.

The actuaries revised the PVDBO as at December 31, 20X1, due to changes in the expected inflation rate. The revised value was $3,490,000.

What amount of pension expense is recognized on Gidget's 20X1 income statement?

a) $720,000

b) $742,500

c) $755,000

d) $763,750