The following information are presented by your client during the course of your audit of

its December 31, 2021 annual report:

                                                                        January 1, 2021.         December 31, 2021
Present Value of Benefits obligations.                  5,000,000.                  5,400,000
Fair Value of pension plan asset                           4,800,000.                  5,276,000
Benefit Paid During the year.                                                                      580,000
Contribution made during the year.                                                             420,000
Current Service cost.                                                                                   395,000
Expected rate of return.                                                                                  10%
Settlement rate.                                                                                               12%
Average working life of employees.                                                           20 years

Based on the following information above,  answer the following questions

1. What is the amount of benefit expense to be charged against income for the year
2021?
A. 585,000
B. 775,000
C. 419,000
D. 616,800

Suggested Solution:
Current Service Cost                                            395,000
Interest Cost (5,000,000x 12%).                           600,000
Interest Income(4,800,000x 12%).                       (576,000)
Net Benefit Expense.                                            419,000

2. What is the amount of the accrued Pension account on December 31, 2021?
A. 124,000
B. 675,000
C. 685,000
D. 1,010,000

Suggested Solution: 
Present Value – Dec 31, 2021.                             5,400,000
Fair Value Plan asset- Dec 31, 2021                    5,276,000
Accrued Pension.                                                  124,000   

3. What is the remeasurement gain/ loss during 2021?

A. 0
B. 40,000
C. 135,000
D. 75,000

Suggested Solution: 
Remeasurement of gain on plan assets during 2021 (Schedule 1).             60,000
Remeasurement of gain on obligation during 2021 (Schedule 2).               15,000
Total Remeasurement gain in 2021.                                                             75,000

Schedule 1:
Fair Value Plan asset- Dec 31, 2021                                    5,276,000
Benefit Paid During the year.                                                   580,000
Total.                                                                                    5,856,000
Less: PV of Plan asset- Jan 1, 2021.      4,800,000
Contribution during 2021.                           420,000.           (5,220,000)
Actual return on asset during 2021.                                         636,000
Less: Interest Income.                                                              576,000
Re-measurement gain on plan assets during 2021.                  60,000

Schedule 2:
PV of benefit obligation – Jan 1, 2021.                                 5,000,000
Interest Cost on beginning obligation.                                     600,000
Current service cost.                                                                395,000
Total.                                                                                      5,995,000
Less: Benefit Obligation- Dec 31, 2021.      5,400,000
Benefit Paid During the year.                          580,000.      (5,980,000)
Remeasurement of gain on obligation during 2021.                15,000