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Compute pension expense for 2010 and 2011.

PBO 1/1/10...........................................60,000
Discount Rate..........................................10%
Fair value of plan assets 1/1/10...............24,000
Initial prior service cost value from
amendment on 1/1/02...........................40,000
unrecognized prior service cost
1/1/2010................................................8,000
Average remaining service life of
employees covered under initial
prior service cost grant.........................10 years
Actuarial loss 1/1/2010.............................12,000
Expected rate of return on plan assets....12%
Average remaining service life used to
used to amortize unrecognized gain
or loss..................................................12 years
Service cost 2010....................................12,000
Service cost 2011....................................14,000
contribution to plan assets 12/31/10........16,000
Contribution to plan assets 12/31/11.......20,000
Actual return on plan assets 2010...........1,800
Actual return on plan assets 2011...........2,400

No benefits were paid in either year. Minimum amortization is taken. Compute pension expense for 2010 and 2011.

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Your tutorial is attached (in Excel, click in cells to see computations) and shows an analysis of ...

Solution Summary

Your tutorial is attached (in Excel, click in cells to see computations) and shows an analysis of the 2010 plan asset account and the 2010 pension benefit obligation account because the ending balance in both is needed to compute 2011 interest cost and expected return. An analysis of the unrecognized gain/loss is shown to see that it is inside the corridor and does not need to be amortized.

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