Refer to Practice 17-6 and Practice 17-7. Assume that as of January 1, 2011 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
Deferred net pension (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Compute
(1) The pension-related asset/liability balance and accumulated other comprehensive income 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 2011, and
(4) The pension-related asset/liability balance and accumulated other comprehensive income balance that would be reported in the balance sheet immediately after the change to 12% (before the impact of any other 2011 transactions).