Hicks Cable Company has a defined benefit pension plan. Three alternative possibilities for pension-related data at January 1, 2021, are shown below: ($ in thousands) Case 1 Case 2 Case 3 Net loss (gain)—AOCI, Jan. 1 $ 337 $ (407 ) $ 297 2021 loss (gain) on plan assets (28 ) (25 ) 5 2021 loss (gain) on PBO (40 ) 33 (301 ) Accumulated benefit obligation, Jan. 1 (3,120 ) (2,720 ) (1,620 ) Projected benefit obligation, Jan. 1 (3,480 ) (2,840 ) (1,870 ) Fair value of plan assets, Jan. 1 2,970 2,870 1,720 Average remaining service period of active employees (years) 12 15 10 Required: 1. For each independent case, calculate any amortization of the net loss or gain that should be included as a component of pension expense for 2021. 2. For each independent case, determine the net loss—AOCI or net gain—AOCI as of January 1, 2022.
Hicks Cable Company has a defined benefit pension plan. Three alternative possibilities for pension-related data at January 1, 2021, are shown below: ($ in thousands) Case 1 Case 2 Case 3 Net loss (gain)—AOCI, Jan. 1 $ 337 $ (407 ) $ 297 2021 loss (gain) on plan assets (28 ) (25 ) 5 2021 loss (gain) on PBO (40 ) 33 (301 ) Accumulated benefit obligation, Jan. 1 (3,120 ) (2,720 ) (1,620 ) Projected benefit obligation, Jan. 1 (3,480 ) (2,840 ) (1,870 ) Fair value of plan assets, Jan. 1 2,970 2,870 1,720 Average remaining service period of active employees (years) 12 15 10 Required: 1. For each independent case, calculate any amortization of the net loss or gain that should be included as a component of pension expense for 2021. 2. For each independent case, determine the net loss—AOCI or net gain—AOCI as of January 1, 2022.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Hicks Cable Company has a defined benefit pension plan. Three alternative possibilities for pension-related data at January 1, 2021, are shown below:
| ($ in thousands) | |||||||||
| Case 1 | Case 2 | Case 3 | |||||||
| Net loss (gain)—AOCI, Jan. 1 | $ | 337 | $ | (407 | ) | $ | 297 | ||
| 2021 loss (gain) on plan assets | (28 | ) | (25 | ) | 5 | ||||
| 2021 loss (gain) on PBO | (40 | ) | 33 | (301 | ) | ||||
| Accumulated benefit obligation, Jan. 1 | (3,120 | ) | (2,720 | ) | (1,620 | ) | |||
| Projected benefit obligation, Jan. 1 | (3,480 | ) | (2,840 | ) | (1,870 | ) | |||
| Fair value of plan assets, Jan. 1 | 2,970 | 2,870 | 1,720 | ||||||
| Average remaining service period of active employees (years) |
12 | 15 | 10 | ||||||
Required:
1. For each independent case, calculate any amortization of the net loss or gain that should be included as a component of pension expense for 2021.
2. For each independent case, determine the net loss—AOCI or net gain—AOCI as of January 1, 2022.
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