Question

The actuary for the pension plan of Oriole Inc. calculated the following net gains and losses. Incurred during the Year (Gain) or Loss 2020 $302,200 2021 476,600 2022 (210,400) 2023 (291,300) 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) 2020 $4,029,300 $2,423,700 2021 4,515,400 2,180,800 2022 5,019,900 2,580,100 2023 4,255,600 3,067,900 Oriole 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, 2020. 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 2020, 2021, 2022, and 2023. Apply the “corridor” approach in determining the amount to be amortized each year.

Answer 1

Computation of the minimum amount of accumulated OCI (G/L) amortized as a component of net periodic pension expense for each of the years 2020, 2021, 2022, and 2023:-
Year	Projected Benefit Obligation as of Jan 1	Plan Assets as of Jan 1	Higher of (Projected Benefit Obligation or Plan Assets)	Corridor	Accumulated OCI - (Gain) or Loss at the beginning of year	Excess at the beginning of theyear	Average Remaining Service period in years	Minimum net (Gain) or loss (gain) amortized	Net (Gain) or loss during the year	Accumulated OCI - (Gain) or Loss at the end of year
a	b	c	d = Higher of (b or c)	e = 10% of d	f	g = (f-e) or 0	h =4400/400	i = g/h	j	k = f-i+j
2020	$4,029,300	$2,423,700	$4,029,300	$402,930	$0	$0	11	$0	$   302,200	$302,200
2021	$4,515,400	$2,180,800	$4,515,400	$451,540	$302,200	$0	11	$0	$   476,600	$778,800
2022	$5,019,900	$2,580,100	$5,019,900	$501,990	$778,800	$276,810	11	$25,165	$ (210,400)	$543,235
2023	$4,255,600	$3,067,900	$4,255,600	$425,560	$543,235	$117,675	11	$10,698	$ (291,300)	$241,238
		Year	Amount of net (gain) or loss amortized and charged to pension expense
		2020	$0
		2021	$0
		2022	$25,165
		2023	$10,698