Reference no: EM131877544

Question - The following year-end information is for the pension plan for the employees of Ortiz Motors, Inc.

                                                           12/31/11              12/31/12

Accumulated benefit obligation              $2,800,000           $3,760,000

Projected benefit obligation                     3,040,000             4,000,000

Fair value of plan assets                         3,080,000              3,520,000

AOCI - Net (gain) or loss                         (425,000)              (480,000)

Actual return on plan assets in 2012:                      $200,000

Actuary's discount rate                                  8%                         8%

Expected rate of return on assets                   7%                         6%

Ortiz estimates that the average remaining service life is 15 years. Ortiz Motor's contribution to the pension fund was $520,000 in 2012 and benefits paid to retirees that year were $280,000.

(i) Calculate the interest cost for 2012.

(ii) Calculate the unexpected gain or loss in 2012.

(iii) Calculate the amortization of the net gain for 2012 using the corridor method.