Question

The following data are for the pension plan for the employees of Lockett Company.

                                                                          1/1/20               12/31/20            12/31/21

Accumulated benefit obligation                  $5,000,000         $5,200,000         $6,800,000

Projected benefit obligation                          5,400,000           5,600,000           7,400,000

Plan assets (at fair value)                               4,600,000           6,000,000           6,600,000

AOCL – net loss                                                       -0-              960,000           1,000,000

Settlement rate (for year)                                                                  10%                      9%

Expected rate of return (for year)                                                        8%                      7%

Lockett’s contribution was $840,000 in 2021 and benefits paid were $750,000. Lockett
estimates that the average remaining service life is 15 years.

The amount of AOCI-net loss amortized in 2021 was

Question 21 options:

	$64,000
	$28,000
	$24,000
	$66,666

Answer 1

Corridor amortisation
Ref	Particulars	Amount
A	Opening OCI gain/ loss	$    960,000.00
	Less: 10% of higher of plan assets or PBO
	Opening balance:
	Plan assets	$ 6,000,000.00
	PBO	$ 5,200,000.00
B	higher of above	$ 6,000,000.00
C	10% of B	$    600,000.00
D= A-C	Amount subject to amortisation	$    360,000.00
E	Amortisation period	$              15.00
F= D/E	Amortisation amount	$      24,000.00

Answer is $24,000

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