Solution for QID #17652: Reagan Western Wear, Inc. has a defined benefit pension plan | StudyHelpMe

Reagan Western Wear, Inc. has a defined benefit pension plan covering its 120 employees. In- formation relating to the plan follows: Fair value of plan assets, Jan. 1, 2005 ................ $3,400,000 Fair value of plan assets, Dec. 31, 2005 ............... 3,720,000 Market-related value of plan assets, Jan. 1, 2005 ...... 2,760,000 Market-related value of plan assets, Dec. 31, 2005 ..... 2,840,000 Benefits paid to retirees during 2005 .................. 168,000 Contributions to pension fund during 2005 .............. 120,000 Reagan expects a 10 percent return on its pension fund assets. Compute the difference between the actual return and the expected return and explain how this amount affects net periodic pension cost for 2005.