Problem - Amortization of Accumulated Oci (g/l), Corridor Approach, Pension Expense Computation
The actuary for the pension plan of Gustafson Inc. calculated the following net gains and losses.
|
Incurred during the Year
|
(Gain) or Loss
|
|
2012
|
$300,000
|
|
2013
|
480,000
|
|
2014
|
(210,000)
|
|
2015
|
(290,000)
|
Other information about the company's pension obligation and plan assets is as follows.
|
As of January 1,
|
Projected Benefit Obligation
|
Plan Assets (market-related asset value)
|
|
2012
|
$4,000,000
|
$2,400,000
|
|
2013
|
4,520,000
|
2,200,000
|
|
2014
|
5,000,000
|
2,600,000
|
|
2015
|
4,240,000
|
3,040,000
|
Gustafson Inc. has a stable labor force of 400 employees who are expected to receive benefits under the plan. The total service-years for all participating employees is 5,600. The beginning balance of accumulated OCI (G/L) is zero on January 1, 2012. The market-related value and the fair value of plan assets are the same for the 4-year period. Use the average remaining service life per employee as the basis for amortization.
Instructions - Prepare a schedule which reflects the minimum amount of accumulated OCI (G/L) amortized as a component of net periodic pension expense for each of the years 2012, 2013, 2014, and 2015. Apply the "corridor" approach in determining the amount to be amortized each year.