Records for the Bass Corporation's defined-benefit pension plan show a net unrecognized loss at December 31,2013,of $30,000,after recording the pension expense for 2013.The average expected service period of the company's employees is 10 years.The actuary notifies Bass's management that an actuarial gain of $4,000 is determined at January 1,2014.Actual return for 2014 is $2,000,and expected return is $3,000.The following information also is available for the 2014:

The minimum amortization of unrecognized loss increases 2014 pension expense by what amount?

Question

Records for the Bass Corporation's defined-benefit pension plan show a net unrecognized loss at December 31,2013,of $30,000,after recording the pension expense for 2013.The average expected service period of the company's employees is 10 years.The actuary notifies Bass's management that an actuarial gain of $4,000 is determined at January 1,2014.Actual return for 2014 is $2,000,and expected return is $3,000.The following information also is available for the 2014:

The minimum amortization of unrecognized loss increases 2014 pension expense by what amount?

Quizplus · Accepted Answer

The minimum amortization of unrecognized loss for 2014 can be calculated as follows:
$30,000/10 = $3,000
Since the actuarial gain of $4,000 is greater than the actual return of $2,000, the expected return of $3,000 will be used to calculate the minimum amortization of unrecognized loss.
Therefore, the minimum amortization of unrecognized loss for 2014 is $3,000 - $2,100 = $900.
This amount will increase the 2014 pension expense by $2,100 + $900 = $3,000 (i.e., $2,100 for the current year's service cost and interest cost, and $900 for the minimum amortization of unrecognized loss), which is option C.

Records for the Bass Corporation's Defined-Benefit Pension Plan Show a Net