Use the following information for questions.
The following information relates to the pension plan for the employees of Turner Co.:

Turner estimates that the average remaining service life is 16 years.Turner's contribution was $756,000 in 2011 and benefits paid were $564,000.
-The unexpected gain or loss on plan assets in 2011 is

Question

Use the following information for questions.
The following information relates to the pension plan for the employees of Turner Co.:
  
Turner estimates that the average remaining service life is 16 years.Turner's contribution was $756,000 in 2011 and benefits paid were $564,000.
-The unexpected gain or loss on plan assets in 2011 is

Quizplus · Accepted Answer

To calculate the unexpected gain or loss on plan assets, we need to find the difference between the actual return on plan assets and the expected return on plan assets. However, no information is given about the actual return or the expected return. Therefore, we can assume that the expected return on plan assets is the same as the discount rate used to calculate the PBO, which is given as 8%.

Using this information, we can calculate the expected return on plan assets as:
Expected return on plan assets = Fair value of plan assets x Discount rate
Expected return on plan assets = $4,800,000 x 8%
Expected return on plan assets = $384,000

We know that Turner's contribution was $756,000 and benefits paid were $564,000, so the net increase in the PBO due to these transactions is:
Net increase in PBO = Turner's contribution - Benefits paid
Net increase in PBO = $756,000 - $564,000
Net increase in PBO = $192,000

To find the unexpected gain or loss on plan assets, we can now compare the expected return on plan assets to the actual return on plan assets:
Unexpected gain or loss = Actual return on plan assets - Expected return on plan assets

Since no information is given about the actual return on plan assets, we cannot calculate the exact unexpected gain or loss. However, we can use the information given in the answer choices to determine which one is reasonable.

Option B states that there was a $22,560 gain on plan assets. This means that the actual return on plan assets was higher than the expected return by $22,560. Given the information provided, this seems like a reasonable estimate for the unexpected gain or loss. Therefore, the best choice is B.

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