Problem: Erikson Company sponsors a defined benefit pension plan. The corporation's actuary provides the following information about the plan.
(First number Jan 1 2010, 2nd Dec 31, 2010)
Vested benefit obligation $1,500 $1,900
Accumulated benefit obligation 1,900 2,730
Projected benefit obligation 2,500 3,300
Plan assets (fair value) 1,700 2,620
Settlement rate and expected rate of return 10%
Pension asset/liability 1,100 ?
Service cost for the year 2010 400
Contributions (funding in 2010) 700
Benefits paid in 2010 200
Q1. Compute the actual return on the plan assets in 2010.
Q2. Compute the amount of the other comprehensive income (G/L) as of December 31, 2010. (Assume the January 1, 2010, balance was zero.)
Q3. Compute the amount of net gain or loss amortization for 2010 (corridor approach).
Q4. Compute pension expense for 2010.