The following information is available from Haan Company relating to its defined benefit pension plan:
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Balances as of January 1, 2003:
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Pension obligation liability
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3,500
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Pension fund assets.
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3,000
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Activity for 2003:
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Service cost
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400
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Contributions to pension fund . .
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$230
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Benefit payments to retirees
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170
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Return on plan assets
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330
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Pension-related interest cost
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280
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1. Compute the amount of pension expense to be reported on the income statement for 2003.
2. Determine the net pension amount to be reported on the balance sheet at the end of the year. Note: The benefit payments to retirees are made out of the pension fund assets. These payments reduce both the amount in the pension fund and the amount of the remaining pension obligation.
3. Interpretive Question: You are an employee of Haan Company and have just received the above information as part of the company's annual report to the employees on the status of the pension plan. Does anything in this information cause you concern? Explain.