Question

The following information pertains to Havana Corporation's defined benefit pension plan:

($ in thousands)	2021 Beginning balances				2022 Beginning balances
Projected benefit obligation	$	(7,500	)		$	(8,004	)
Plan assets		7,200				7,836
Prior service cost–AOCI		750				700
Net loss–AOCI	$	870			$	950

At the end of 2021, Havana contributed $755 thousand to the pension fund and benefit payments of $744 thousand were made to retirees. The expected rate of return on plan assets was 10%, and the actuary's discount rate is 7%. There were no changes in actuarial estimates and assumptions regarding the PBO.

What is Havana’s 2021 gain or loss on plan assets?

Multiple Choice

• $216.0 thousand.

• $179.0 thousand.

• $395.0 thousand.

• None of these are correct

Answer 1

Solution:

Option D (None Of These Are Correct) is the correct answer.

Explanation:

Calculation Of Actual Return On Plan Assets
Particulars	Amount (000s)	Amount (000s)
Beginning Of 2021	$7,200
Actual Return	?	$625 [$7,836+$744-$755-$7,200]
Cash Contributions	$755
Less: Retiree Benefits	($744)
End Of 2021	$7,836

Calculation Of Havana’s 2021 Loss On Plan Assets
Particulars	Amount (000s)
Expected Return [10%*7200]	$720
Actual Return	$625
Loss On Plan Assets	$95