Kenseth Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values for its pension plan assets. Projected Plan
Benefit Assets
Obligation Value
2013 $2,000,000 $1,900,000
2014 2,400,000 2,500,000
2015 2,950,000 2,600,000
2016 3,600,000 3,000,000
The average remaining service life per employee in 2013 and 2014 is 10 years and in 2015 and 2016 is 12 years. The net gain or loss that occurred during each year is as follows: 2013, $280,000 loss; 2014, $90,000 loss; 2015, $11,000 loss; and 2016, $25,000 gain.
Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule.
Year
Minimum Amortization of Loss
2013 $
2014 $
2015 $
2016 $

Year Minimum Amortization of Loss

2013 $0

2014 $3,000

2015 $ $6,000

2016 $1,000

Explanation:

Computation of the amount of net gain or loss amortized and charged to pension expense in each of the four years.

Corridor and Minimum Loss Amortization

Year 2013

Projected Benefit Obligation (a) $2,000,000

Plan Assets $1,900,000

10%Corridor 200,000

(10%×$2,000,000)

AccumulatedOCI (G/L) (a) $0

Minimum Amortization of loss $0

(a) As of the beginning of the year

Year 2014

Projected Benefit Obligation (a) $2,400,000

PlanAssets $2,500,000

10%Corridor 250,000

(10%×$2,500,000)

AccumulatedOCI (G/L) (a) $280,000

Minimum Amortization of loss $3,000 (b)

(b) ($280,000-$250,000)÷10 years

=$30,000÷10 years

=$3,000

Year 2015

Projected Benefit Obligation (a) $2,950,000

PlanAssets $2,600,000

10%Corridor 295,000

(10%×$2,950,000)

AccumulatedOCI (G/L) (a) $367,000(c)

Minimum Amortization of loss $6,000 (d)

(c) ($280,000-$3,000+$90,000)

=$367,000

(d) ($367,000-$295,000)÷12 years

=$72,000÷12 years

=$6,000

Year 2016

Projected Benefit Obligation (a) $3,600,000

PlanAssets $3,000,000

10%Corridor 360,000

(10%×$3,600,000)

AccumulatedOCI (G/L) (a) $372,000(e)

Minimum Amortization of loss $1,000 (f)

(e) $367,000-$6,000+$11,000

=$372,000

(f) ($372,000-$360,000)÷12 years

=$12,000 ÷12 years

=$1,000

Therefore the amount of net gain or loss amortized and charged to pension expense in each of the four years are:

Year Minimum Amortization of Loss

2013 $0

2014 $3,000

2015 $ $6,000

2016 $1,000

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