Question

Problem 20-3 (Part Level Submission) Cullumber Company sponsors a defined benet plan for its 100 employees. On January 1, 2017, the company's actuary provided the following information Accumulated other comprehensive loss (PSC) $152,900 Pension plan assets (fair value and market-related asset value) 196,600 Accumulated benefit obligation 256,600 Projected benefit obligation 380,500 The average remaining service period for the participating employees is 10 years. All employees are expected to receive benefits under the plan. On December 31, 2017, the actuary calculated that the present value of Ruture benefitseamed for employee services rendered in the current year amounted to $51.500; the projected benefit obligation was $491,100; fair value of pension assets was $273,100; the accumulated benefit obligation amounted to $370,000. The expected return on plan s and the discontrate on the projected benent a tion were both 10%. The actual return on plan t is $10,300. The company's current year's contribution to the pension plan mounted to 566,200. No benefits were paid during the year.

Answer 1

a)	Pension Expense
	Service Cost(Present value of future benefit earned for employee service rendered in the current year)	$     51,500.00
	Interest on Projected benefit obligation($380500*10%)	$     38,050.00
	Actual return on plan assets(given)	$   -10,300.00
	Unexpected loss=($10300-$196600*10%)	$     -9,360.00
*	Amortization of gain/loss in 2017	$                    -
	Amortization of prior service cost =($152900/10)	$     15,290.00
	Pension Expense	$     85,180.00
b)	Year 2017
	General,Journal	Debit	Credit
	Other comprehensive income (Gain/Loss)(Calculated below)	$     30,410.00
	Pension Expense	$     85,180.00
	To Cash		$    66,200.00
	To pension Assets/Liability($30410+$85180-$66200-$15290)		$    34,100.00
	To Other Comprehensive Income		$    15,290.00
	Increase/Decrease in gain/losses in 2017
	PBO on December 31st,2017		$4,91,100.00
	Less: PBO on 1/1/2017	$ 3,80,500.00
	Add: Interest=($380500*10%)	$     38,050.00
	Add: Service Cost	$     51,500.00
	Less: Benefit Payments	0	$4,70,050.00
	Liability loss		$    21,050.00
	Fair value of plan assets on 31/1/2017		$2,73,100.00
	Less: Expected value of plan assets on 1/1/2017	$ 1,96,600.00
	Add: Expected Return($196600*10%)	$     19,660.00
	Add: Contribution on Pension plan	$     66,200.00
	Less: Benefit Paid	0	$2,82,460.00
	Assets loss		$     -9,360.00
	Net loss on 31/12/2017
	Liability loss	$     21,050.00
	Assets loss	$       9,360.00
	Total Net loss	$     30,410.00
*	Beginning balance in accumulated OCI(Gain/loss)	Nil
	so no amortization occurs in 2017
	Net Loss=	$     30,410.00
	Corridor
	10% of excess of (PBO or market related assets value)=10% of excess of (*$491100 or $273100)	$     49,110.00
	Corridor of $49110 > $30410 so no gain/loss on Amortization