Question

Exercise 20-17 Blossom Company sponsors a defined benefit pension plan for its 600 employees. The company's actuary provided the following information about the plan. Projected benefit obligation Accumulated benefit obligation Plan assets (fair value and market-related asset value) Accumulated net (gain) or loss (for purposes of the corridor calculation) Discount rate (current settlement rate) Actual and expected asset return rate Contributions January 1, 2017 $2,810,000 1,910,000 1,710,000 0 December 31, 2017 2018 $3,665,900 $4,209,172 2,411,000 2,900,000 2,904,000 3,779,000 199,000 (25,000) 9 % 8 % 10 % 10 % 1,023,000 584,600 The average remaining service life per employee is 10.5 years. The service cost component of net periodic pension expense for employee services rendered amounted to $404,000 in 2017 and $474,000 in 2018. The accumulated OCI (PSC) on January 1, 2017, was $1,354,500. No benefits have been paid. Compute the amount of accumulated OCI (PSC) to be amortized as a component of net periodic pension expense for each of the years 2017 and 2018. Amount of accumulated OCI (PSC) to be amortized for the year 2017 s Amount of accumulated OCI (PSC) to be amortized for the year 2018 LINK TO TEXT LINK TO TEXT LINK TO TEXT Prepare a schedule which reflects the amount of accumulated OCI (G/L) to be amortized as a component of pension expense for 2017 and 2018. Projected Benefit Plan 10% Accumulated Minimum Amortization Year Obligation Assets Corridor OCI (G/L) of (Gain) Loss 2017 2018 LINK TO TEXT LINK TO TEXT LINK TO TEXT

Answer 1

	Answer
Answer 1		Year	Prior Service Cost Amortized	Calculation
		2017	$129,000	($1,354,500 ÷ 10.5 years)
		2018	1,29,000	($1,354,500 ÷ 10.5 years)

Answer 2	Amortization of Net (Gain) or Loss`
	(Gain) or Loss	Amount
	For the Year Ended December 31,
	2017	($199,000
	2018	-25,000

Year	Projected Benefit Obligation (a)	Plan	10% Corridor(b)	Accumulated	Minimum Amortization of (Gain) Loss
				OCI (G/L)(a)
2017	$2,810,000	$1,710,000	$281,000	($           0	$ –0–
2018	36,65,900	29,04,000	3,66,590	1,99,000	–0–(c)

ANSWER C
	Pension Expense for 2018:	2018
	Service cost	$474,000
	Interest on projected benefit obligation ($3,665,900 x 8%)	$293,272
	Expected return on plan assets ($2,904,000 x 10%)	($290,400)
	Amortiation of prior service cost (From (a))	$129,000
	Pension Expense for 2018	$605,872
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