The City of Austin has a defined benefit pension plan. The Projected Benefit Obligation on January 1, 2015 is $10,000,000. This was based on a 10% discount rate. The fair value of the pension fund (plan assets) on January 1, 2015 is $10,400,000. The plan assets were expected to earn a long-term rate of 8%. The service cost for the calendar year is $750,000. Also on January 1, 2015 prior service costs totaled $25,000 which is expected to be amortized in full during the calendar year 2015. There was not any deferred gain or loss at the beginning of the year. The actual return on the pension fund for calendar year 2015 amounted to $900,000. The accumulated benefit obligation was $9,500,000 on January 1, 2015.
Requirement:
Compute pension expense for the year.