Acct 310

Exercise 17-9

Requirement 1

($ in millions)

Service cost $20

Interest cost 12

Expected return on the plan assets ($9 actual, less $1 gain) (8)

Pension expense $24

Requirement 2

Pension expense (calculated above) 24

Plan assets (expected return on plan assets) 8

PBO ($20 service cost + $12 interest cost) 32

Plan assets 20

Cash (given) 20

Exercise 17-10

Requirement 1

($ in 000s)

Service cost $310

Interest cost (7% x $2,300) 161

Expected return on the plan assets ($216 actual, plus $24 loss*) (240)

Amortization of prior service cost 25

Amortization of net gain (6)

Pension expense $250

* (10% x $2,400) – (9% x $2,400)

Requirement 2

Pension expense (calculated above) 250

Plan assets (expected return on assets) 240

Amortization of net gain–OCI 6

Amortization of prior service cost–OCI 25

PBO ($310 service cost + $161 interest cost) 471

Plan assets 245

Cash (given) 245

The amortization amounts are reported as other comprehensive income in the statement of comprehensive income.

Exercise 17-12

Requirement 1

($ in 000s) Case 1 Case 2 Case 3

Net loss or gain $320 $330 $260

Less: 10% corridor (threshold)* – 331 270 170

Excess none $ 60 $ 90

Service period ÷ 12 15 10

Amortization none $ 4 $ 9

* 10% times either the PBO or plan assets (beginning of the year), whichever is larger

Requirement 2

($ in 000s) Case 1 Case 2 Case 3

January 1, 2009 $320 ($330) $260

2009 loss (gain) on plan assets (11) (8) 2

2009 amortization 0 4 (9)

2009 loss (gain) on PBO (23) 16 (265)

January 1, 2010 $286 ($318) ($ 12)

Note: The balance in this account is recognized as...