Determining the amortization of net gain
Response to the following problem:
Herring Wholesale Company has a defined benefit pension plan. On January 1, 2016, the following pensionrelated data were available:
($ in 000s)
Net gain-A0C1 $ 170
Accumulated benefit obligation 1,170
Projected benefit obligation 1,400
Fair value of plan assets
Average remaining service period of active employees 15 years
(expected to remain constant for the next several years)
The rate of return on plan assets during 2016 was 9%, although it was expected to be 10%. The actuary revised assumptions regarding the PBO at the end of the year, resulting in a $23,000 decrease in the estimate of that obligation.
Required:
1. Calculate any amortization of the net gain that should be included as a component of net pension expense for 2016.
2. Assume the net pension expense for 2016, not including the amortization of the net gain component, is $325,000. What is pension expense for the year?
3. Determine the net loss-AOCI or net gain-AOCI as of January 1, 2017.