Question: Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The remaining amortization period at December 31, 2016, for
Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The remaining amortization period at December 31, 2016, for prior service cost is 5 years. The average remaining service life of employees is 11 years at January 1, 2017, and 10 years at December 31, 2017. The AOCInet actuarial (gain) loss was zero at December 31, 2016. Turner smooths recognition of its gains and losses when computing its market-related value to compute expected return.
Additional Information:
|
| December 31, | |||||
| Description | 2017 | 2016 | ||||
| PBO | $ | 1,450,000 |
| $ | 1,377,000 |
|
| ABO |
| 1,425,000 |
|
| 1,350,000 |
|
| Fair value of plan assets |
| 1,395,000 |
|
| 1,085,000 |
|
| Market-related value of plan assets (smoothed recognition) |
| 1,369,000 |
|
| 1,085,000 |
|
| AOCIprior service cost |
| ? |
|
| 292,000 |
|
| Balance sheet pension asset (liability) |
| ? |
|
| (292,000 | ) |
| Service cost |
| 117,400 |
|
|
|
|
| Contribution |
| 169,000 |
|
|
|
|
| PBO actuarial gain |
| 113,250 |
|
|
|
|
| Benefit payments made |
| None |
|
| None |
|
| Discount rate |
| 5 | % |
| 5 | % |
| Expected rate of return |
| 7 | % |
| 7 | % |
Required:
- Compute the 2017 increase/decrease in AOCInet actuarial (gain) loss and the amount to be amortized in 2017 and 2018.
- Confirm that the pension asset (liability) on the balance sheet equals the funded status as of December 31, 2017.
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