Kenseth 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
2011 $2,000,000 $1,900,000
2012 2,400,000 2,500,000
2013 2,950,000 2,600,000
2014 3,600,000 3,000,000
The
average remaining service life per employee in 2011 and 2012 is 10 years and in
2013 and 2014 is 12 years. The net gain or loss that occurred during each year
is as follows: 2011, $280,000 loss; 2012, $90,000 loss; 2013, $11,000 loss; and
2014, $25,000 gain. (In working the solution, the gains and losses must be
aggregated to arrive at year-end balances.)
Corridor
and Minimum Loss Amortization
|
Year
|
Projected
Benefit Obligation (a)
|
Plan
Assets |
10%
Corridor
|
Accumulated
OCI
(G/L) (a)
|
Minimum Amortization of Loss
|
|
2011
|
$2,000,000
|
$1,900,000
|
$200,000
|
$ 0
|
$ 0
|
|
2012
|
2,400,000
|
2,500,000
|
250,000
|
280,000
|
3,000(b)
|
|
2013
|
2,950,000
|
2,600,000
|
295,000
|
367,000(c)
|
6,000(d)
|
|
2014
|
3,600,000
|
3,000,000
|
360,000
|
372,000(e)
|
1,000(f)
|
(a) As of the beginning of the year.
(b) ($280,000 – $250,000) ÷ 10 years = $3,000
(c) $280,000 – $3,000 + $90,000 = $367,000
(d) ($367,000 – $295,000) ÷ 12 years = $6,000
(e) $367,000 – $6,000 + $11,000 = $372,000
(f) ($372,000 – $360,000) ÷ 12 years = $1,000
