assuming a tax rate of 40 what is the net effect of the required adjustment on accum 604571

Tulip Corporation, a publicly traded company, implemented a defined benefit pension plan for its employees on January 2, 2004. The following data are provided for 2006 and as of December 31, 2006:

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Projected benefit obligation

$600,000

Accumulated benefit obligation

550,000

Plan assets at fair value

520,000

Pension cost for 2006

180,000

Pension contribution for 2006

150,000

Assume that as of January 1, 2006, Tulip’s pension plan was fully funded, and there were no recorded pension assets or liabilities on the balance sheet. Assuming a tax rate of 40%, what is the net effect of the required adjustment on accumulated other comprehensive income on December 31, 2006?

  1. $90,000 decrease.
  2. $108,000 decrease.
  3. $36,000 decrease.
  4. $0