Hudson Company’s actuary has provided the following information concerning the company’s defined benefit pension plan at the end of 2016:
Fair value of plan assets (1/1/2016) ........ $350,000
Actual projected benefit obligation (1/1/2016) ..... 360,000
Expected projected benefit obligation (1/1/2016) ... 424,000
Average remaining service life of employees .... 10 years
The difference between the actual and expected projected benefit obligation first occurred in 2015.
Required:
1. Compute the amount of (lie gain or loss for Hudson’s pension plan at the beginning of 2016, assuming that Hudson uses the corridor approach.
2. Compute the amount of (lie net gain or loss to include in Hudson’s pension expense for 2016. Indicate whether it is an addition to or a subtraction from pension expense.
3. If Hudson Company is using IFRS, how would the gain or loss be treated?