Bridgeport Corp. has the following beginning-of-the-year present values for its

Question

Bridgeport 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 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, $316,400 loss; 2017, $101,700 loss; 2018, $12,430 loss; and 2019, $28,250 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.

Projected
Benefit
Obligation

Plan
Assets
Value

2016 $2,260,000 $2,147,000 2017 2,712,000 2,825,000 2018 3,333,500 2,938,000 2019 4,068,000 3,390,000

Explanation / Answer

Corridor and minimum loss amortisation

Year Projected Benefit Plan 10%corridor Accumulated OCI Minimum

Obligation Assets (G/L) Amortization of Loss

__________________________________________________________________________________________

2016 2,260,000 2,147,000 226000 0(a) 0

2017 2,712,000 2,825,000 282500 316400 3390(b)

2018 3,333,500 2,938,000 293800 414710(c) 10076(d)

2019 4,068,000 3,390,000 339000 417064 (e) 6505 (f)

(a) As of the beginning of the year

(b) (316400 - 282500) / 10 years = 3390

(c) 316400 -3390+101700 = 414710

(d) (414710 - 293800) / 12 = 10076

(e) 414710 - 10076) + 12430 = 417064

(f) (417064 - 339000) / 12 = 6505

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