Defined Contribution Plan Expense Calculation: Company M Example

The amount of expense to be recognized by Company M in the current year is CU26,000.

To calculate the expense, we need to consider the prepaid amount at the beginning of the year and the amount paid during the year.

The prepaid amount at the beginning of the year (CU4,000) is an asset, as it represents future benefits that will be used by the employees. This amount needs to be recognized as an expense over the service period.

The amount paid during the year (CU22,000) is also an expense, as it represents the actual contributions made by the company for the employees' service.

Therefore, the total expense to be recognized is the sum of the prepaid amount at the beginning of the year and the amount paid during the year: CU4,000 + CU22,000 = CU26,000.

So, the correct answer is A CU26,000.