Question

# Flint Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values...

Flint Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values for its pension plan assets.

projected benefit obligation plan assets value
2016 \$2,460,000 \$2,337,000
2017 2,952,000 3,075,000
2018 3,628,500 3,198,000
2019
 4,428,000
3,690,000

The average remaining service life per employee in 2016 and 2017 is 10 years and in 2018 and 2019 is 12 years. The net gain or loss that occurred during each year is as follows: 2016, \$344,400 loss; 2017, \$110,700 loss; 2018, \$13,530 loss; and 2019, \$30,750 gain. (In working the solution, the gains and losses must be aggregated to arrive at year-end balances.)

Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule.

 year minimum amortization of loss 2016 2017 2018 2019

Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule.

 Year Projected Benefit Obligation (a) Plan Assets 10% Corridor Accumulated OCI (G/L) (a) Minimum Amortization of Loss 2016 \$2460000 \$2337000 \$246000 \$0 \$0 2017 2952000 3075000 307500 344400 3690 2018 3628500 3198000 362850 451410 7380 2019 4428000 3690000 442800 457560 1230

(a) As of the beginning of the year.

(b ) (\$344400 – \$307500) ÷ 10 years = \$3690

(c) \$344400 – \$3690 + \$110700 = \$451410

(d) (\$451410 – \$362850) ÷ 12 years = \$7380

(e) \$451410 – \$7380 + \$13530 = \$457560

(f) (\$457560 – \$442800) ÷ 12 years = \$1230