Question

Cullumber Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan.

		January 1,		December 31,
		2020		2020		2021
Projected benefit obligation		$2,780,000		$3,622,200		$4,163,976
Accumulated benefit obligation		1,900,000		2,441,000		2,904,000
Plan assets (fair value and market-related asset value)		1,700,000		2,896,000		3,753,000
Accumulated net (gain) or loss (for purposes of the corridor calculation)		0		196,000		(24,000	)
Discount rate (current settlement rate)				9	%	8	%
Actual and expected asset return rate				10	%	10	%
Contributions				1,026,000		567,400

The average remaining service life per employee is 10.5 years. The service cost component of net periodic pension expense for employee services rendered amounted to $396,000 in 2020 and $472,000 in 2021. The accumulated OCI (PSC) on January 1, 2020, was $1,312,500. No benefits have been paid.

(a)

Compute the amount of accumulated OCI (PSC) to be amortized as a component of net periodic pension expense for each of the years 2020 and 2021.

Amount of accumulated OCI (PSC) to be amortized for the year 2020		$
Amount of accumulated OCI (PSC) to be amortized for the year 2021		$

Answer 1

			OCI
	Annual Pension expenses	Cash	PSC	Gain/Loss	Pension Assets Liablity	Projected benefit Obligation	Plan Assets
Bal 1 Jan 2020			1312500			2780000	1700000
Adjustment
Service Cost	396000					396000
Interest Cost	250200					250200
Return on assets	-278000						278000
Contribution		-1026000					1026000
Amortisation of PSC	125000		-125000
Change in actuary assumption on plan assets			-108000			-108000
Change in actuary assumption on projected benefot obligation		-196000		196000
	493200		1187500	-304000
Bal 31 dec 2020						3622200	2896000
		Pension Worksheet
			OCI
	Annual Pension expenses	Cash	PSC	Gain/Loss	Pension Assets Liablity	Projected benefit Obligation	Plan Assets
Bal 1 Jan 2021			1187500	-304000		3622200	2896000
Adjustment
Service Cost	472000					472000
Interest Cost	289776					289776
Return on assets	-231680						231680
Contribution		-567400					567400
Amortisation of PSC	125000		-125000
Change in actuary assumption on plan assets			57920			57920
Change in actuary assumption on projected benefit obligation		-220000		-220000
			1062500	-162080
Bal 31 dec 2021						4163976	3753000