Total Pension Expense Calculation for Company XYZ

Very Hard Employee Compensation Defined Benefit Plans

Company XYZ operates a defined benefit pension plan for its employees. As of the end of the fiscal year, the company reported the following information regarding the plan:

Projected Benefit Obligation (PBO): $1,500,000
Fair Value of Plan Assets: $1,200,000
Service Cost for the Year: $250,000
Interest Cost on PBO: $120,000
Actuarial Gain Recognized: $50,000

Based on the above information, what is the total pension expense that Company XYZ should recognize in its income statement for the year? Consider the components of pension expense according to the guidance in IFRS or US GAAP.

Total Pension Expense = Service Cost + Interest Cost - Actuarial Gain = $250,000 + $120,000 - $50,000 = $320,000

Total Pension Expense = Service Cost + Interest Cost = $250,000 + $120,000 = $370,000

Total Pension Expense = Service Cost + Interest Cost + Actuarial Gain = $250,000 + $120,000 + $50,000 = $420,000

Hint

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