Without taking pension expense into account

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Reference no: EM131204332

Without taking pension expense into account, a company reports net income for Year One of $600,000. On January 1, Year One, the company started a defined benefit pension plan for its workers. These employees were given credit on that date for the time they had spent with the company prior to the start of this plan. These benefits created a projected benefit obligation of $360,000. On that date, the workers were expected to work for 9 more years on the average before retiring. The service cost for Year One was $100,000 and the interest rate used for the projected benefit obligation was 10 percent. No funding had taken place by the end of Year One. Which of the following is correct for the Year One financial statements? Ignore income tax effects. a. Net income is reported at $460,000 and comprehensive income is reported at $100,000. b. Net income is reported at $424,000 and comprehensive income is reported at $104,000. c. Net income is reported at $500,000 and comprehensive income is reported at $100,000. d. Net income is reported at $440,000 and comprehensive income is reported at $124,000.

Reference no: EM131204332

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