Amortization of Unrecognized Gains/Losses for Pensions

Amortization of Unrecognized Gains/Losses for Pensions

Unit 5 DB Amortization of Unrecognized Gains/Losses for Pensions

 Vickie Plato, accounting clerk in the personnel office of Streisand Corp., has

begun to compute pension expense for 2019 but is not sure whether or not she

should include the amortization of unrecognized gains/losses. She is currently

working with the following beginning-of- the-year present values for the projected

benefit obligation and market-related values for the pension plan:

Projected Benefit Obligation Plan Assets Value

2016 $2,200,000 $1,900,000

2017 2,400,000 2,500,000

2018 2,900,000 2,600,000

2019 3,900,000 3,000,000

 The average remaining service life per employee in 2016 and 2017 is 10 years

and in 2018 and 2019 is 12 years. The net gain or loss that occurred during each

year is as follows.

2016 $280,000 loss

2017 85,000 loss

2018 12,000 loss

2019 25,000 gain

 Answer the following questions in the Discussion Board:

 You are the manager in charge of accounting. Write a memo to Vickie Plato,

explaining why in some years she must amortize some of the net gains and

losses and in other years she does not need to. In order to explain this situation

fully, you must compute the amount of net gain or loss that is amortized and

charged to pension expense in each of the 4 years listed above. Include an

appropriate amortization schedule, referring to it whenever necessary.

 Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Accounting for pensions

and postretirement benefits. Intermediate accounting (16th ed.). (p. 1177). New

York, NY: John Wiley & Sons, Inc.

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