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Question 7BE

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Intermediate Accounting (Kieso)
Found in: Page 1162

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Short Answer

Shin Corporation had a projected benefit obligation of $3,100,000 and plan assets of $3,300,000 at January 1, 2017. Shin also had a net actuarial loss of $465,000 in accumulated OCI at January 1, 2017. The average remaining service period of Shin’s employees is 7.5 years. Compute Shin’s minimum amortization of the actuarial loss.

Actuarial loss is a term used when an organization bears a specific decrease in projected benefit obligation. It is highly influenced and affected by the discount percentage used in ascertaining the plan’s future worth.

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Step by Step Solution

Given the amounts:

Particulars

Amount

Projected benefit obligation

$3,100,000

Plan assets as on Jan 1, 2017

$3,300,000

Actuarial loss

$465,000

Average remaining service period

7.5 years

Computation of Shin’s minimum amortization of actuarial loss.

Particulars

Amount

Net loss in accumulated OCI

$465,000

Less: Corridor

$330,000

Excess

$135,000

Divide: Average remaining service life

7.5 years

Minimum amortization of the actuarial loss

$18,000

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