Question

Answer questions 1-4 from the following information.

Beginning PBO: $600,000	Contributions: $47,000
Beginning Plan Assets: $550,000	Benefits Paid: $33,000
Amendment-January 1: $170,000	Actual Return: $29,000
Service Cost: $52,000	Average Work Life: 17 years
Discount Rate: 3%	Expected Rate of Return: 6%

1. Compute the ending balance of the projected benefit obligation (PBO).
2. Compute the ending balance of the prior service cost in AOCI.
3. Compute the ending balance of the plan assets.
4. Compute the ending balance of the unrecognized net gain or loss in AOCI.

Answer 1

a.)	Computation the ending balance of the projected benefit obligation (PBO):-
		Opening PBO	600,000
	Add:	Service cost	52,000
	Add:	Interest cost	18,000
		( 600,000 x 3% )
	Less:	Benefits paid	- 33,000
		Ending Balance	637,000
b.)	Computation the ending balance of the prior service cost in AOCI:-
		Opening Balance	170,000
	Less:	Amortization of Prior service cost	-10,000
		( 170,000 / 17 )
		Ending Balance	160,000
c.)	Compute the ending balance of the plan assets:-
		Opening Balance	550,000
	Add:	Contributions	47,000
	Add:	Actual return on plan asset	29,000
	Less:	Benefit paid	-33,000
		Closing	593,000
d.)	Computation of the ending balance of the unrecognized net gain or loss in AOCI.
		Expected return	33,000
		( 550,000 x 6% )
		Less: Actual return	29,000
		Difference	4,000
		Opening Balance of unrecognized net gain or loss	-
		Add: Current period difference of return	4,000
		Ending balance of unrecognized net loss in AOCI	4,000