Question

Sarasota 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
2019		$2,140,000		$2,033,000
2020		2,568,000		2,675,000
2021		3,156,500		2,782,000
2022		3,852,000		3,210,000

The average remaining service life per employee in 2019 and 2020 is 10 years and in 2021 and 2022 is 12 years. The net gain or loss that occurred during each year is as follows: 2019, $299,600 loss; 2020, $96,300 loss; 2021, $11,770 loss; and 2022, $26,750 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
2019		$enter a dollar amount
2020		$enter a dollar amount
2021		$enter a dollar amount
2022		$enter a dollar amount

Answer 1

Year	Projected Benefit Obligation (a)	Plan Assets	10% Corridor	Accumulated OCI (G/L) (a)	Minimum Amortization of Loss
2019	$2,140,000	$2,033,000	$214,000	$0	$0
2020	2,568,000	2,675000	256,800	299,600	4,280
2021	3,156,500	2,782,000	315,650	391,620	6,331
2022	3,852,000	3,210,000	385,200	397,059	988

(a) As of the beginning of the year.

(b ) ($299,600– $256,800) ÷ 10 years = $4,280

(c) $299,600 – $4,280+ $96,300 = $391,620

(d) ($391,620– $315,650) ÷ 12 years = $6,331

(e) $391,620 – $6,331 + $11,770= $397,059

(f) ($397,059 – $385,200) ÷ 12 years = $988

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