Net Gain or Loss
Response to the following problem:
The actuary of the Hudson Company has provided the following information concerning the company's defined benefit pension plan at the end of 2010:
Fair value of plan assets (1/1/2010) $350,000
Actual projected benefit obligation (1/1/2010) 360,000
Expected projected benefit obligation (1/1/2010) 424,000
Average remaining service life of employees 10 years
The difference between the actual and expected projected benefit obligation first occurred in 2009.
Required
1. Compute the amount of the gain or loss for the Hudson Company's pension plan at the beginning of 2010.
2. Compute the amount of the net gain or loss to include in the Hudson Company's pension expense for 2010. Indicate whether it is an addition to or a subtraction from pension expense.
3. If the Hudson Company is using IFRS and does not wish to use the corridor method to amortize the gain or loss, what choices does it have?