Exercise 20-8 Your answer is partially correct. Try again. Sarasota Corp. has th

ID: 2525673 • Letter: E

Question

Exercise 20-8 Your answer is partially correct. Try again. Sarasota 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 2017 2018 2019 $2,280,000 2,736,000 3,363,000 4,104,000 $2,166,000 2,850,000 2,964,000 3,420,000 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, $319,200 loss 2017, $102,600 loss; 2018, $12,540 loss; and 2019, $28,500 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 342 2018 4615 2019 132

Explanation / Answer

Minimum Amortisation of Loss

2016 = 0

2017 = $3,420

2018 = $6,840

2019 = $1,133

Year

Benefit Obligation

Plan Assets

10%

Accumulated OCI (G/L)

Minimum Amortization of Loss

2016

2280000

2166000

228000

2017

2736000

2850000

285000

319200

3420(a)

2018

3363000

2964000

336300

418380(b)

6840©

2019

4104000

3420000

410400

424000(d)

1133(e)

(a)($319200 – $285000) ÷ 10 years= $3420

(b)$319200 – $3420 + $102600= $418380

(c)($418380 – $336300) ÷ 12 years = $6840

(d)$418300 – $6840 + $12540= $424000

(e)($424000 – $410400) ÷ 12 years= $1133