Reference no: EM132878905
Problem - FMC Inc. provides its employees with a defined benefit pension plan, details of which follow:
Pension obligation 12/31/20X5 $7,000,000
Plan assets 12/31/20X5 $5,900,000
Discount rate used in actuarial assumptions 4%
Current service cost for the year - end of year $590,000
Past service cost (improvement in benefits) - 01/01/20X6 $60,000
Actuarial gain due to a change in assumption $0
Actual return on plan assets $275,000
Remitted to pension trustee - evenly throughout year $670,000
Payments to retirees - evenly throughout year $640,000
Required - What is the net amount that will be charged to pension expense for FMC Inc.'s December 31, 20X6 year end?
a. $623,000
b. $644,600
c. $694,000
d. $683,000
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