Question

Pension data for Sterling Properties include the following: ($ in 000s) Service cost, 2018 $ 114 Projected benefit obligation, January 1, 2018 600 Plan assets (fair value), January 1, 2018 700 Prior service cost–AOCI (2018 amortization, $8) 82 Net loss–AOCI (2018 amortization, $1) 103 Interest rate, 9% Expected return on plan assets, 13% Actual return on plan assets, 14% Required: Assume Sterling Properties prepares its financial statements according to International Financial Reporting Standards. 9% is the interest rate on high grade corporate bonds. Determine the net pension cost.

Answer 1

Sterling Properties Pension Expense: Service Cost Interest Cost Expected Return on assets Amortization of prior service cost Amortization of net loss Pension expense 114 54 -91 1 86 Explanation Service Cost Interest Cost 600 x 9% Expected return on the plan assets Amortization of prior service cost (98 -7) Amortization of net loss Pension expense 114 54 -91 8 86 (700 x 14%)-(700 x 13%)-98-91-7