a) Compute pension expense for the year 2010 

a) Compute pension expense for the year 2010 .    

Water Inc. has the following balances at 1/1/10 that relate to its defined-benefit pension plan:

Plan Assets

$800,000

Net Pension Liability

100,000

Accumulated OCI (PSC)

200,000

During 2010, the following additional data is available:

Service Cost for 2010

$75,000

Interest rate

15%

Actual return on plan assets in 2010

70,000

Amortization of prior service cost

8,000

Expected return on plan assets

80,000

Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions

60,000

Contributions in 2010

85,000

Benefits paid to retirees in 2010

55,000

b)    Compute the net gain/loss that is amortized in each of the 2 years above.

George Incorporated has the following balances as of the beginning of each year:

Year                        Plan Assets        Pension Asset (Liability)

2010                     $1,700,000                  $(200,000)

2011                       2,300,000                   100,000

In 2010 there is also a $250,000 opening balance in Accumulated OCI for unrecognized gains. The average remaining service life per employee in 2010 is 12 years, and in 2011 it is 10 years. The net gain or loss that occurred during each year is as follows:

Year                      Gain (Loss)

2010                         $350,000 

2011                         (400,000)