McGrath Financial Corp. has a defined benefit pension plan. As of January 1, 2011, the following balances were computed for the pension plan:

Deferred pension gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 420,000

Fair value of the pension fund . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300,000

Market-related value of the pension fund (5-year weighted average) . . . . . . . . . . . . . . 2,850,000

PBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900,000

ABO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500,000

It was anticipated that the pension plan would earn 12% of the market-related value of the pension fund in 2011. The actual return on the pension fund was $315,000. The company has elected to amortize the deferred pension gains and losses over 10 years.

Instructions:

1. Compute the amount of deferred gain or loss for 2011.

2. Compute the amount of amortization of deferred pension gain or loss for 2011.

3. Computed pension expense is $534,000. However, this computation ignores any deferred gains or losses for the year (meaning that actual, rather than expected, return on the pension fund was included in the computations) as well as any amortization of deferred gains or losses from prior years. What is pension expense after considering the impact of deferred gains and losses and their amortization?

4. What is the deferred pension gain or loss that McGrath will carry forward to 2012?