The actuary for the pension plan of Marigold Inc. calculated the following net g

Question

The actuary for the pension plan of Marigold Inc. calculated the following net gains and losses.

Incurred during the Year

(Gain) or Loss

Other information about the company’s pension obligation and plan assets is as follows.

As of January 1,

Projected Benefit
Obligation

Plan Assets
(market-related asset value)

Marigold Inc. has a stable labor force of 400 employees who are expected to receive benefits under the plan. The total service-years for all participating employees is 4,400. The beginning balance of accumulated OCI (G/L) is zero on January 1, 2017. The market-related value and the fair value of plan assets are the same for the 4-year period. Use the average remaining service life per employee as the basis for amortization.

Compute the minimum amount of accumulated OCI (G/L) amortized as a component of net periodic pension expense for each of the years 2017, 2018, 2019, and 2020. Apply the “corridor” approach in determining the amount to be amortized each year. (Round answers to 0 decimal places, e.g. 2,500.)

Year

Minimum Amortization of (Gain) Loss

Incurred during the Year

(Gain) or Loss

2017 $301,100 2018 476,000 2019 (209,300) 2020 (287,700)

Explanation / Answer

Corridor

10% of (a) or (b) ,

whichever is higher

Net (Gain) or Loss

Year End

(given)

Accu.

OCI

Begining of the year

Calculation Of Average Remaining Service Life:

4400 / 400 = 11 years  

Year Projected Benefit Obligation (a) Plan Asset (b)

Corridor

10% of (a) or (b) ,

whichever is higher

Net (Gain) or Loss

Year End

(given)

Accu.

OCI

Begining of the year

Minimum Amortisation gain or loss 2017 $4,027,200 $2,403,600 $402,720 $301,100 $0 $0 2018 $4,507,600 $2,187,600 $450,760 $476,000 $301,100 $0 2019 $5,029,300 $2,602,800 $502,930 (209,300) $777,100 $24,925 2020 $4,200,500 $3,026,800 $420,050 (287,700) $542,875 $11,166

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