Reference no: EM132601993

Question - Net Gain or Loss

Hudson Company's actuary has provided the following information concerning the company's defined benefit pension plan at the end of 2016:

Fair value of plan assets (1/1/2016)$350,000

Actual projected benefit obligation (1/1/2016)360,000

Expected projected benefit obligation (1/1/2016)424,000

Average remaining service life of employees10 years

The difference between the actual and expected projected benefit obligation first occurred in 2015.

Required -

1. Compute the amount of the gain or loss for Hudson's pension plan at the beginning of 2016. Assuming that Hudson uses the corridor approach ________ at beginning of 2016 $________

2. Compute the amount of the net gain or loss to include in Hudson's pension expense for 2016. Indicate whether it is an addition to or a subtraction from pension expense. Net ______ recognized in 2016 ______ pension expense $_____

3. If the Hudson Company is using IFRS, how would the gain or loss be treated?

Hudson would immediately recognize the gain or loss as other comprehensive income.

Hudson would amortize the gain or loss using the corridor approach.

Hudson would use any systematic and rational approach that results in slower amortization than the corridor approach.

Hudson would immediately recognize the gain or loss in net income in the period it occurs.