Problem - Tom Johnson Company sponsors a defined benefit plan for its 100 employees. On December 31, 2015, the company's actuary provided the following information:
1/1/15 12/31/15
Vested Benefit Obligation $1500 $1900
Accumulated Benefit Obligation 1900 2730
Projected Benefit Obligation 2800 3645
Plan Assets (Fair Value) 1700 2620
Pension Asset/Liability 1100 ?
Service Cost for the Year 2015 400
Contributions (Funding 2015) 800
Benefits Paid in 2015 200
OCI (G/L) Balance -0- ?
Settlement Rate and Expected Rate of Return 10%
NOTE: You can use a pension worksheet but you must show your work in the spaces provided on the Exam. Please do not attach a worksheet. Be sure to label all items.
Required:
1. Compute the actual return on plan assets in 2015.
2. Compute the amount of the OCI (G/L) as of 12/31/15.
3. Compute the amount of net gain or loss amortization for 2015 (corridor approach).
4. Compute the pension expense for 2015.