Solution-What amount of the pension gain-loss must be

What amount of the pension gain-loss must be amortized

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Question - On January 1, 2020, . reported a $50,000 credit balance in Accumulated OCI-Pension Gain/Loss related to its defined pension plan, representing an unexpected gain on plan assets due to a good year in the stock market. The company had a PBO balance on January 1, 2020, of $230,000. On December 31, 2020, the balance in the PBO was $510,000. The company had a plan asset balance on January 1, 2020, of $201,000 and on December 31, 2020, the plan asset balance was $300,000. The company amortizes unrecognized gains and losses using the corridor approach over the average remaining service life of employees (10 years).

What amount (if any) of the pension gain/loss must be amortized to pension expense in 2020, and what is the effect on pension expense?

a. $5,000 increase to pension expense

b. $5,0000 decrease to pension expense

c. $2700 decrease to pension expense

d. $2700 increase to pension expense

e. $100 decrease to pension expense

f. $0 because only losses are amortized and the company has a gain

g. $100 increase to pension expense

Reference no: EM133054143

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What amount of the pension gain-loss must be amortized

Reference no: EM133054143

Reference no: EM133054143

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