Question

4. The following information for Robinson, Inc.is given below:

	December 31, 2018
Pension Plan Assets and Obligations
Plan assets (at fair value)	$        900,000
Projected benefit obligation	$     1,200,000
Robinson, Inc.’s General Ledger
Accumulated other comprehensive income (gain)/loss	$        180,000
The average remaining service life of employees is 10 years.

Instructions

1. Determine the amount of loss that will be included in arriving at 2019’s pension expense for Robinson, Inc.

2. Assume that Robinson, Inc. reported an unexpected gain of $40,000 on its pension plan in 2019. Determine the December 31, 2019 balance in the Accumulated Other Comprehensive Income - (Gain)/Loss account.

Answer 1

Requirement a: Calculate the amount of loss to be amortized to pension expense as follows:

Particulars	Amount
Accumulated other comprehensive income (gain)/loss	$180,000
The Corridor: 10% of $1,200,000 (PBO being higher)	$120,000
Excess at the beginning of the year	$60,000
Average remaining service period in yours	÷ 10
Amount amortized to pension expense	$6,000

Requirement b. Calculate the balance in accumulated other comprehensive income (Gain) /loss account as follows

Particulars	Amount
Beginning balance of accumulated other comprehensive income (gain)/loss	$180,000
Deduct: Amount amortized to pension expense	($6,000)
Deduct: Unexpected gain	($40,000)
Ending balance of accumulated other comprehensive income (gain)/loss	$134,000