20-1.3
yrs Expected PVOA[i,n] PV re tireme nt PVSS[i, n] PV re tireme nt
last-5 of Benefit bene fit i=.06/12 stream at i=.06 strea m
salary service formula* ea rned** n=240 retire ment date*** n=yrs till retire today
Jose $200,000.00 3 0.0021417 $1,285.00 139.581 $179,361.59 0.0865274 $15,519.69
Allison $180,000.00 3 0.0021417 $1,156.50 139.581 $161,425.43 0.137912 $22,262.50
Emeka $160,000.00 3 0.0021417 $1,028.00 139.581 $143,489.27 0.184557 $26,481.95
$64,264.14
PBO at 12/31/2010 = 64,264.14
PBO(12/31/2010)=PBO(12/31/2009) + service cost + interest cost – payments to retirees
64264.14=$40,417.59+service cost + $40,417.59 x .06 – 0
Interest cost=2425
Service cost=21421.55
MV plan assets (12/31/2010)=MV plan assets (12/31/2009) + cash contributed to pension plan + dollar return on plan
assets – retirement payments to retirees
11300=8000 + 4200 + dollar return on plan assets – 0
Dollar return on plan assets = 900 loss
Expected return on plan assets = 8000 x .08 = 640
Unexpected loss in pension plan assets = actual return – expected return = (900) – 640 = (1540)
Funded status of pension plan = PBO – MV assets = 64264.14 – 11300 = 52964.14 underfunded
Any portion of the 12/31/2009 cumulative unexpected gain in pension plan assets (i.e., 496.11) subject to
amortization in 2010? Materiality benchmark is greater(10% of 12/31/2009 PBO, 10% of 12/31/2009 MV), or
greater(.10 of 40,417.59,.10 of 8000) = greater(4042,800) = 4042. So, is 496.11 greater than 4042? No. So,
none of the 496.11 will be amortized to pension expense in 2010.
GAAP pension expense for 2010 = 21421.55 + 2425 – 640 = 23206.55
AJE:
Pension expense 23206.55
Pension liability 24,746.55
Other accumulated comprehensive income 1540
The balance in other accumulated comprehensive income at 12/31/2010 = 1043.90 debit
