Ex. 20-124—Corridor amortization.

Explain corridor amortization.

Ex. 20-125—Corridor approach amortization of net gains and losses.

Hanna Company has 200 employees who are expected to receive benefits under the company's defined-benefit pension plan. The total number of service-years of these employees is 2,000.  The actuary for the company's pension plan calculated the following net gains and losses:

For the Year Ended

December 31 (Gain) Or Loss

2007$660,000

2008(594,000)

2009990,000

Prior to 2007, there was no unrecognized net gain or loss.

Information about the company's projected benefit obligation and market-related asset values follows:

 

 

 

As of January 1

 

 

 

2007

2008

2009

 

Projected benefit obligation

$2,100,000

$2,340,000

$2,940,000

 

Market-related asset values

1,680,000

2,460,000

2,550,000

 

Ex. 20-125  cont.)

Instructions

Based on the above information about Hanna Company, prepare a schedule which reflects the amount of unrecognized net gain or loss to be amortized by the company as a component of pension expense for the years 2007, 2008, and 2009. The company amortizes unrecognized net gains or losses using the straight-line method over the average service life of participating employees.

 

 

 

Place New Order
It's Free, Fast & Safe

"Looking for a Similar Assignment? Order now and Get a Discount!