Pension data for Sterling Properties include the following: ($ in 000s) Service

Question

Pension data for Sterling Properties include the following: ($ in 000s) Service cost, 2018 $ 130 Projected benefit obligation, January 1, 2018 660 Plan assets (fair value), January 1, 2018 700 Prior service cost–AOCI (2018 amortization, $9) 93 Net loss–AOCI (2018 amortization, $2) 114 Interest rate, 5% Expected return on plan assets, 9% Actual return on plan assets, 10% Required: Assume Sterling Properties prepares its financial statements according to International Financial Reporting Standards. 5% is the interest rate on high grade corporate bonds. Determine the net pension cost.

Explanation / Answer

Answer

a , service cost = service cost + prior year service cost

= 130 + 93

= 223

b , net interst income = 5 % * ( net asset - net obligation )

= 5 % * ( 700 - 660 )

= 5 % * 40

= 2

c. remeasurement gain = ( 10 % - 5 % ) * 700

= 5 % * 700

= 35

d net pension cost = 223 + 2 - 35

= 190

=  

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