Computation of Gain or Loss Component
McGrath Financial Corp. has a defined benefit pension plan. As of January 1, 2008, the following balances were computed for the pension plan:
|
Unrecognized pension gain |
$ 420,000 |
|
Fair value of the pension fund |
3,300,000 |
|
Market related value of the pension fund (5 year weighted average) |
2,850,000 |
|
PBO |
3,900,000 |
|
ABO |
3,500,000 |
It was anticipated that the pension plan would earn 12% of the market related value of the pension fund in 2008. The actual return on the pension fund was $315,000. The company has elected to amortize the unrecognized pension gains and losses over 10 years.
Instructions:
1. Compute the amount of gain or loss deferral for 2008.
2. Compute the amount of amortization of unrecognized pension gain or loss for 2008.
3. If net periodic pension expense, exclusive of the gain or loss component, is $534,000, what is the net periodic pension expense after including the gain or loss component?
4. What is the unrecognized pension gain or loss that McGrath will carry forward to 2009?