Exercise 20-8 Projected Benefit Obligation Plan Assets Value Year Minimum Amorti
ID: 2459549 • Letter: E
Question
Exercise 20-8
Projected
Benefit
Obligation
Plan
Assets
Value
Year
Minimum Amortization of Loss
Exercise 20-8
Kenseth 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
The average remaining service life per employee in 2013 and 2014 is 10 years and in 2015 and 2016 is 12 years. The net gain or loss that occurred during each year is as follows: 2013, $718,200 loss; 2014, $230,850 loss; 2015, $28,215 loss; and 2016, $64,125 gain.
Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule.
Year
Minimum Amortization of Loss
2013$
2014$
2015$
2016$
Explanation / Answer
Projected Benefit Obligation Plan Assets Value 10% Corridor net gain or loss average remaining service life Balance Minimum Amortization of Loss Ending A B C D E F G Given Given 10% of higher of A and B Given Given Ending Balance of previous year (F+C)/G F-G+D 2013 51,30,000 48,73,500 513000 -7,18,200 10 0 0 -7,18,200 2014 61,56,000 64,12,500 641250 -2,30,850 10 -7,18,200 -7,695 -9,41,355 2015 75,66,750 66,69,000 756675 -28,215 12 -9,41,355 -15,390 -9,54,180 2016 92,34,000 76,95,000 923400 64,125 12 -9,54,180 -2,565 -8,87,490 Projected Benefit Obligation Plan Assets Value 10% Corridor net gain or loss average remaining service life Balance Minimum Amortization of Loss Ending A B C D E F G Given Given 10% of higher of A and B Given Given Ending Balance of previous year (F+C)/G F-G+D 2013 51,30,000 48,73,500 513000 -7,18,200 10 0 0 -7,18,200 2014 61,56,000 64,12,500 641250 -2,30,850 10 -7,18,200 -7,695 -9,41,355 2015 75,66,750 66,69,000 756675 -28,215 12 -9,41,355 -15,390 -9,54,180 2016 92,34,000 76,95,000 923400 64,125 12 -9,54,180 -2,565 -8,87,490
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