Question

Monty 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		$2,120,000		$2,014,000
2017		2,544,000		2,650,000
2018		3,127,000		2,756,000
2019		3,816,000		3,180,000

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, $296,800 loss; 2017, $95,400 loss; 2018, $11,660 loss; and 2019, $26,500 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		$

Answer 1

solution: a year Projected benefit obligation Plan asset value 10% corridor** Accumulated OCI (G/L) Minimum amortisation of loss 2016 2120000 2014000 212000 0 2017 2544000 2650000 265000 296800 3180 b 2018 3127000 2756000 312700 389020 C 6360 d 2019 3816000 3180000 381600 394320 1060 e working as of the beginning of the year (296800-265000/10 296800-3180+95400 (389020-312700)/12 389020-6360+11660 (394320-381600/12 0 3180 389020 6360 394320 1060 0 **10% of Projected benefit oblilgation or plan asset value which ever is higher