Prepare a schedule which reflects the minimum amount of accumulated OCI (G/L) amortized as a… 1 answer below »

(Amortization of Accumulated OCI (G/L), Corridor Approach, Pension Expense Computation) The actuary for the pension plan of Gustafson Inc. calculated the following net gains and losses.

Incurred during the Year

(Gain) or Loss

2012

$300,000

2013

480,000

2014

(210,000)

2015

(290,000)

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)

2012

$4,000,000

$2,400,000

2013

4,520,000

2,200,000

2014

5,000,000

2,600,000

2015

4,240,000

3,040,000

Gustafson 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 5,600. The beginning balance of accumulated OCI (G/L) is zero on January 1, 2012. 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.

Instructions

Prepare a schedule which reflects the minimum amount of accumulated OCI (G/L) amortized as a component of net periodic pension expense for each of the years 2012, 2013, 2014, and 2015. Apply the “corridor” approach in determining the amount to be amortized each year.

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