Impact of Changes in Actuarial Estimates
Refer to Practice 17 6 and Practice 17 7. Assume that as of January 1, 2008 Wu Company changed the discount rate it uses to compute the PBO from 8% to 12%. Assume that before this change, Wu Company had the following pension related balances:
|
Projected benefit obligation (PBO) |
$(26,169) |
|
Fair value of pension fund |
23,000 |
|
Unrecognized net pension (gain)/loss |
1,100 |
|
Unrecognized prior service cost |
2,000 |
Compute (1) the prepaid/accrued pension cost balance that would be reported in the balance sheet before the change to 12%, (2) the PBO balance after the change to 12%, (3) interest cost for 2008, and (4) the prepaid/accrued pension cost balance that would be reported in the balance sheet immediately after the change to 12% (before the impact of any other 2008 transactions).