Multiple Choice Question 76 The following data are for the pension plan for the

Question

Multiple Choice Question 76

The following data are for the pension plan for the employees of Ivanhoe Company.

Ivanhoe’s contribution was $740000 in 2018 and benefits paid were $650000. Ivanhoe estimates that the average remaining service life is 10 years.

The corridor for 2018 was $500000. The amount of AOCI-net loss amortized in 2018 was

1/1/17 12/31/17 12/31/18 Accumulated benefit obligation $ 4000000 $ 4200000 $ 5800000 Projected benefit obligation 4400000 4600000 6400000 Plan assets (at fair value) 3600000 5000000 5600000 AOCL – net loss 0 870000 900000 Settlement rate (for year) 9% 8% Expected rate of return (for year) 7% 6%

Explanation / Answer

Answer

The amount of AOCI - net loss amortized in 2018 was

= (AOCL net loss on 12/31/17 - Corridor for 2018) / Remaining Service Life

= (870000 - 650000) /10 years

= $22000

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