Question: The Northeastern Company has a defined benefit pension plan. The company's actuary has determined that a loss has occurred at the beginning of Year 1 caused by demographic changes related to the composition of its workforce and revisions to life expectancy calculations. Northeastern uses the corridor approach to amortize unrecognized gains and losses. The following information relates to the actuarial loss:
Actuarial loss related to active employees. . . . . . . . . . . . . . . . . . . $315,000
Actuarial loss related to inactive/retired employees. . . . . . . . . . . . . 85,000
Total actuarial loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $400,000
Average remaining service lives of active employees. . . . . . . . . . . . 20 years
Average life expectancy of inactive/retired employees. . . . . . . . . . . 15 years
Required: Assume that the total loss of $400,000 is outside the corridor range. Calculate the amortization of the actuarial loss under
(a) IFRS and
(b) U.S. GAAP.