contestada

Harvey Hotels has provided a defined benefit pension plan for its employees for several years. At the end of the most recent year, the following information was available with regard to the plan: service cost: $7.5 million, expected return on plan assets: $2.5 million, actual return on plan assets: $2.3 million, interest cost: $2.7 million, payments to retired employees: $3.3 million, and amortization of prior service cost (created when the pension plan was amended causing a drop in the projected benefit obligation): $2.4 million. What amount should Harvey Hotels report as pension expense in its income statement for the year

Respuesta :

Answer:

$10.1 million

Explanation:

The computation of pension expense is shown below:-

Pension expense = Service cost + Interest cost + Amortization of prior service cost - Expected return on plan assets

= $7.5 million + $2.7 million + $2.4 million - $2.5 million

= $10.1 million

Therefore for computing the pension expenses we simply applied the above formula.