The company reports the following balances in its pension-related accounts as of January 1 of Year 1. Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $870,000

Projected benefit obligation (PBO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925,000

At December 31 of Year 1, the company estimates service costs for the year of $101,000 and interest costs equal to 10% of the beginning PBO balance. In addition, plan assets earned a return of $117,300. Over the long run, the company expects to earn 12% per year on its pension fund assets. (1) What pension amount would the company have reported in its balance sheet as of January 1 of Year 1? Clearly state whether the amount is an asset or a liability. (2) Compute the amount to be reported on the income statement as pension expense for Year 1.