Question

The following information pertains to Sparta Company’s defined benefit pension plan:
Discount rate ............ 8%
Expected rate of return on plan assets . 10%
Average service life ....... 12 years
At .............. 1/1/14
PBO ............. $600,000
Fair value of pension plan assets . 720,000
AOCI—prior service cost .... 240,000
AOCI—net actuarial (gain) loss ... (96,000)
At ............. 12/31/14
PBO ............. 910,000
Fair value of pension plan assets . 825,000

Service cost for 2014 was $90,000. No contributions were made or benefits paid during the year. Sparta’s Accrued pension liability was $8,000 at January 1, 2014. Sparta uses the straight-line method of amortization over the maximum period permitted.

Required:
Determine the amount for each of the following items:
1. Interest cost.
2. Expected dollar return on plan assets.
3. Actual return on plan assets.
4. Recognized actuarial gain (minimum amortization).
5. Recognized prior service costs.
6. Balance in the AOCI—net actuarial (gain) loss account on December 31, 2014.



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  • CreatedSeptember 10, 2014
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