For Oxford Corporation, year-end plan assets were $3,000,000. At the beginning of the year, plan assets...

For Oxford Corporation, year-end plan assets were $3,000,000. At the beginning of the year, plan assets were $2,450,000. During the year, contributions to the fund were $180,000 and benefits paid were $110,000. Compute Oxford's actual return on plan assets.

Select one:

a. $260,000

b. $350,000

c. $480,000

d. $550,000

e. $840,000

Solutions

Expert Solution

Answer is (c) = $480,000.

Reason:

Opening Balance + Contributions to the fund + Return on Plan Assets - Benefits paid = Closing Balance of Plan Assets.

Let return on plan assets be x.

Inserting the amounts in the formula given above,

$2,450,000 + $180,000 + x - $110,000 = $3,000,000

$2,520,000 + x = $3,000,000

x = $3,000,000 - $2,520,000

x = $480,000

Therefore, the actual return on the plan assets is $480,000.

Note: Actuarial gain/(loss) has not been given in the question hence it is not considered.

All other options are incorrect as we did not get those amounts through the above mentioned calculation.

ekkarill92 answered 2 years ago

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