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Chapter 20: Question 1BE (page 1162)

AMR Corporation (parent company of American Airlines) reported the following (in millions). Service cost $366 Interest on P.B.O. 737 Return on plan assets 593 Amortization of prior service cost 13 Amortization of net loss 154 Compute AMR Corporation鈥檚 pension expense.

Short Answer

Expert verified

Pension Expense is the type of expense an organization bears for its employees eligible for receiving a pension amount from the organization. Its amount strictly depends upon the pension plan taken.

Step by step solution

01

Given are the following amounts:

Particulars

Amount (in millions)

Service cost

$366

Interest cost on projected benefit obligation

$737

Amortization of net loss

$154

Return on plan assets

$593

Prior service cost amortization

$13

02

Calculation of Pension Expense of AMR Corporation. 

Particulars

Amount (in millions)

Service cost

$366

Add: Interest cot on PBO

$737

Less: Return on the plan assets

$593

Add: Prior service cost amortization

$13

Add: Amortization of net loss

$154

Pension Expense

$677

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