Question

Hall of Fame Co. has a defined benefit pension plan. Two alternative possibilities for pension-related data for the current calendar year are shown below:

	Case 1		Case 2
Net loss (gain), Jan. 1	$(249,800	)	$228,000
Loss (gain) on plan assets	(6,900	)	2,900
Loss (gain) on PBO	12,900		(229,000	)
ABO, Jan. 1	(1,590,000	)	(1,440,000	)
PBO, Jan. 1	(1,790,000	)	(1,690,000	)
Plan assets, Jan.1	2,090,000		1,540,000
Average remaining service period of active employees (years)	12		10

Required:

1.	For each independent case, calculate amortization of the net loss or gain that should be included as a component of pension expense for the current year. (Input all amounts as positive values.)

      

2.	Determine the net loss or gain as of December 31 of the current year. (Amounts to be deducted and loss amounts should be indicated by a minus sign.)

      

Answer 1

Working Note; Calculation 2090000*10%=209000 16,90000*10%=169000

Solution 1
Particulars	Case 1	Case 2
Net Loss or Gain	$249,800	$228,000
Less:10% corridor	-209000	-1,69,000
Excess	$40800	$59,000
Service Period	12	10
Amortization	3400	5900

Solution 2
Particulars	Case 1	Case 2
Balance ,January 1	($249,800)	$228,000
Loss(gain) on Plan Assets	(6900)	2900
Amortisation	3400	(5900)
Loss(gain) on PBO	12,900	(2,29,000)
Net Loss(Gain),12/31	(2,40,400)	(4000)