Question

20.16 (LO! (Amortization of Accumulated OCI (G/L), Corridor Approach, Pension Expense Computation) The actuary for the pension plan of Gustafson Inc, calculated the following net gains and losses. Incurred During the Year (Gain) or Loss 2020 $300,000 2021 480.000 2022 (210,000) 2023 (290,000) Other information about the company's pension obligation and plan assets is as follows. Projected Bencfit Plan Assets As of January 1, Obligation (market-related asset value) 2020 $4,000,000 52.400,000 2021 4,520,000 2,200,000 2022 5,000,000 2,600,000 2023 4,240,000 3,040,000 Gustafson Inc. has a stable labor force of 400 employees who are expected to receive benefits under the plan. The total service-years for all participating employees is 5.600. The beginning balance of accumulated OCI (G/I.) is zero on January 1, 2020. The market-related value and the fair value of plan assets are the same for the 4-year period. Use the average remaining service life per employee as the basis for amortization.

Please show all working.

Answer 1

Gustafson Inc.
	Average remaining life per employee=(the total service year for all participating employees)/Number of employees
	Total service year for all participating employees=(A)	5600
	Number of employees=(B)	400
	Average remaining life per employee=(A)/(B)	14
	Net Gain/Loss---(Given)
	Incurred during the year	Gain/loss
	2020	300000
	2021	480000
	2022	-210000
	2023	-290000
Year	Projected benefit obligation(Given)	Plan Assets(Given)	Corridor	Accumulated OCI (G/L)	Minimum amortization of gain/loss
2020	$                                                                                            40,00,000.00	$                24,00,000.00	$ 4,00,000.00	$                                        -	$                                                                -
2021	$                                                                                            45,20,000.00	$                22,00,000.00	$ 4,52,000.00	$                     3,00,000.00	$                                                                -
2022	$                                                                                            50,00,000.00	$                26,00,000.00	$ 5,00,000.00	$                     7,80,000.00	$                                                 20,000.00
2023	$                                                                                            42,40,000.00	$                30,40,000.00	$ 4,24,000.00	$                     5,50,000.00	$                                                   9,000.00
	Corridor=10% of excess of Projected benefit obligation or Plan Assets
2020	$4000000>$2400000=($4000000*10%)=	$                  4,00,000.00
2021	$4520000>$2200000=($4520000*10%)=	$                  4,52,000.00
2022	$5000000>$2600000=($5000000*10%)=	$                  5,00,000.00
2023	$4240000>$3040000=($4240000*10%)=	$                  4,24,000.00
	Accumulated OCI(G/L)
2020	$0
2021	$300000
2022	($300000+$480000)
2023	($780000-$20000-$210000)
	Minimum Amortization gain/loss
2020	Corridor> Accumulated OCI (G/L)=($400000> 0)	$                                     -
2021	Corridor> Accumulated OCI (G/L)=($452000>$300000)	$                                     -
2022	Accumulated OCI(G/L )> Corridor=($780000-$500000)/14	$                      20,000.00	*
2023	Accumulated OCI(G/L )> Corridor=($550000-$424000)/14	$                        9,000.00
	(Accumulated OCI-Corridor)/Remaining useful life	*