Question

Culver Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan.

		January 1, 2017		December 31, 2017
Vested benefit obligation		$1,650		$1,750
Accumulated benefit obligation		1,750		2,750
Projected benefit obligation		2,250		3,560
Plan assets (fair value)		1,730		2,640
Settlement rate and expected rate of return				10	%
Pension asset/liability		520		?
Service cost for the year 2017				440
Contributions (funding in 2017)				750
Benefits paid in 2017				210

(a) Compute the actual return on the plan assets in 2017.

(b) Compute the amount of the other comprehensive income (G/L) as of December 31, 2017. (Assume the January 1, 2017, balance was zero.) (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

(c) Compute the amount of net gain or loss amortization for 2017 (corridor approach).

(d) Compute pension expense for 2017.

please show how to get answers

Answer 1

A. Compute the actual return on the plan assets in 2017:

Particulars	Amount in $
Plan assets at Ending of the year	2,640
Less: Plan assets at beginning of the year	1,730
Change in Plan Assets	910
Less Frest Contribution	750
Add: Benefits Paid	210
Actual Return	370

B.  Compute the amount of the other comprehensive income (G/L) as of December 31, 2017.

Particulars	Amount in $
Projected benefit obligation at Ending of the year	3,560
Less: Projected benefit obligation at beginning of the year	2,250
Less Service Cost	440
Less: Interest on opening PBO (2250X10%)	225
Add: Benefits Paid	210
Liability Cost	855
Plan assets at Ending of the year	2640
Less: Plan assets at beginning of the year	1730
Less: Expected Reurn @ 10%	173
Less: Contribution	750
Add: Benefits paid	210
Assets Gain	197
Net Gain or (Loss) (197-855)	(658)

C. Compute the amount of net gain or loss amortization for 2017 (corridor approach).

In the above question there is no any opening Accumulated net gain or loss exist. Hence, no amortization required

D. Compute pension expense for 2017.

Particulars	Amount in $
Service cos	440
Interest Cost (2250X10%)	225
Actual Return	(370)
Assets Gain	197
Pension Expense	492