Impact of Changes in Actuarial Estimates Refer to Practice 17-6 and Practice 17-7. Assume that as of…

Impact of Changes in Actuarial Estimates

Refer to Practice 17-6 and Practice 17-7. Assume that as of January 1, 2008 Wu Company changed the discount rate it uses to compute the PBO from 8% to 12%. Assume that before this change, Wu Company had the following pension-related balances:

Projected benefit obligation (PBO)                                                   

$(26,169)

Fair value of pension fund                                                         

23,000

Unrecognized net pension (gain)/loss                                                  

1,100

Unrecognized prior service cost                                                    

2,000

Compute (1) the prepaid/accrued pension cost balance that would be reported in the balance sheet before the change to 12%, (2) the PBO balance after the change to 12%, (3) interest cost for 2008, and (4) the prepaid/accrued pension cost balance that would be reported in the balance sheet immediately after the change to 12% (before the impact of any other 2008 transactions).

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