Harvey Hotels Has Provided a Defined Benefit Pension Plan for Its

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: $6.2 million, expected return on plan assets: $1.2 million, actual return on plan assets: $1 million, interest cost: $1.4 million, payments to retired employees: $2 million, and amortization of prior service cost (created when the pension plan was amended causing a drop in the projected benefit obligation) : $1.1 million. What amount should Harvey Hotels report as pension expense in its income statement for the year?

A) $1.4 million
B) $7.5 million
C) $7.7 million
D) $8.7 million

Correct Answer:

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