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Actual return and unexpected gain on plan assets

R25). Use the following information for questions I through III below.

The following data are for the pension plan for the employees of Nickels Company.
....................................................... 1/1/07..... 12/31/07..... 12/31/08
Accumulated benefit obligation $7,500,000 $7,800,000 $10,200,000
Projected benefit obligation........ 8,100,000.. 8,400,000.. 11,100,000
Market-related asset value........ 6,600,000.. 8,700,000.... 9,300,000
Plan assets (at fair value).......... 6,900,000.. 9,000,000.... 9,900,000
Accumulated OCI-Loss................... -0-........ 1,440,000..... 1,500,000
Settlement rate (for year)................................... 10%........... 9%
Expected rate of return (for year)...................... 8%............. 7%

Nickels' contribution was $1,260,000 in 2008 and benefits paid were $1,125,000. Nickels estimates that the average remaining service life is 15 years.

I. The actual return on plan assets in 2008 was

a. $900,000.
b. $765,000.
c. $600,000.
d. $465,000.

II. The actual return on plan assets in 2008 was $765,000. The unexpected gain on plan assets in 2008 was

a. $156,000.
b. $135,000.
c. $114,000.
d. $72,000.

III. The corridor for 2008 was $870,000. The amount of Accumulated OCI-Loss amortized in 2008 under the corridor method was

a. $100,000.
b. $96,000.
c. $42,000.
d. $38,000.

Solution Preview

1. Actual return on plan assets is
Change in plan assets (9,900,000-9,000,000) 900,000
Less: ...

Solution Summary

The solution explains how to calculate actual return and unexpected gain on plan assets

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