Question

, 4RA- 80873 203270 Use the answer booklet provided for your answer. You MUST show ALL calculations required calculations MUST be placed on the answer booklet. Points will be to receive full credit. subtracted for failure to follow all directions. Amortization of Accumulated OCI (Gain/Loss) 1. The actuary for the pension plan of Ortman Corporation calculated the following net gains and losses. OCI (Gain/Loss) is zero at January 1, 2014, (Gain) or Loss Incurred During $270,000 2014 2015 Srvice Co 20432,000 2016 0 .000 (189,000) (261,000) 2017 Other information about the company's pension obligation and plan assets is as follows. Projected Benefit Obligatio Plan Assets January 1 $2,160,000 2014 fioos $3,600,000 2015 4,068,000 & Vethe w1,980,000 d 1 foyour an d to the per2.340.000 botiom o the December 31, 2018 2016 y O eyurjon 2017 4.500,000 2,736,000 3,816,000 iman has a labor force of 500 employees who are expected to receive benefits under the plan. total service-years for all employees is 7,500. Use the average remaining service life per oloyee as the basis for the amortization ructions: are a schedule using the corridor approach to reflect the minimum Accumulated OCI (Ga ss) amortization for 2014, 2015, 2016, and 2017. must show all calculations to receive full credit! Use the answer sheet provided your answer. DO NOT PUT MORE THAN ONE PROBLEM ONA PAGE

Answer 1

year	Projected Benefit Obligation	Plan Assets	Corridor	Accumulated OCI (G/L)	Minimum Amortization of (Gain) Loss
2014	3600000	2160000	360000	0	0
2015	4068000	1980000	406800	270000 (270000+0)	0
2016	4500000	2340000	450000	702000 (432000+270000)	16800
2017	3816000	2736000	381600	496200	7640

Corridor = 10%*greater of the projected benefit obligation or plan assets (respective year)

Here for every year Projected Benefit Obligation is greater than plan assets. Therefore,

3600000*10% = 360000; 4068000*10% = 406800; 4500000*10% = 450000; 3816000*10% = 381600

Average remaining service life per employee = Expected future years of service/number of employees = 7500/500 = 15

Minimum Amortization of (Gain) Loss (2016) = (702000-450000)/15 = 16800

Accumulated OCI (G/L) (2017) = 702000-16800-189000 = 496200

Minimum Amortization of (Gain) Loss (2017) = (496200-381600)/15 = 7640