Bramble Corp. has the following beginning-of-the-year present values for its pro
ID: 2401709 • Letter: B
Question
Bramble Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values for its pension plan assets. Projected Benefit Obligation Plan Assets Value 2016 $2,380,000 $2,261,000 2017 2,856,000 2,975,000 2018 3,510,500 3,094,000 2019 4,284,000 3,570,000 The average remaining service life per employee in 2016 and 2017 is 10 years and in 2018 and 2019 is 12 years. The net gain or loss that occurred during each year is as follows: 2016, $333,200 loss; 2017, $107,100 loss; 2018, $13,090 loss; and 2019, $29,750 gain. (In working the solution, the gains and losses must be aggregated to arrive at year-end balances.) Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule. Year Minimum Amortization of Loss 2016 $ 2017 $ 2018 $ 2019 $
Explanation / Answer
SOLUTION
Corridor and minimum loss amortization-
Minimum loss amortization in 2017 = (333,200 - 297,500) / 10 = $3,570
Balance in Accumulated OCI = 333,200 - 3,570 + 107,100 = $436,730
Minimum loss amortization in 2018 = (436,730 - 351,050) / 12 = $7,140
Balance in Accumulated OCI = 436,730 - 7,140 + 13,090 = $442,680
Minimum loss amortization in 2019 = (442,680 - 428,400) /12 = $1,190
Year Projected benefit obligation ($) Plan assets ($) 10% corridor ($) Accumukated OCI (Gain/Loss) ($) Minimum amortization of loss ($) 2016 2,380,000 2,261,000 238,000 - 2017 2,856,000 2,975,000 297,500 333,200 3,570 2018 3,510,500 3,094,000 351,050 436,730 7,140 2019 4,284,000 3,570,000 428,400 442,680 1,190