Exercise 17-9

Requirement 1 ($ in millions) Service cost $20 Interest cost 12 Expected return on the plan assets ($9 actual, less $1 gain) (8) Pension expense $24

Requirement 2 Pension expense (calculated above) 24 Plan assets (expected return on plan assets) 8 PBO ($20 service cost + $12 interest cost) 32

Plan assets 20 Cash (given) 20

Exercise 17-10

Requirement 1 ($ in 000s) Service cost $310 Interest cost (7% x $2,300) 161 Expected return on the plan assets ($216 actual, plus $24 loss*) (240) Amortization of prior service cost 25 Amortization of net gain (6) Pension expense $250 * (10% x $2,400) – (9% x $2,400)

Requirement 2 Pension expense (calculated above) 250 Plan assets (expected return on assets) 240 Amortization of net gain–OCI 6 Amortization of prior service cost–OCI 25 PBO ($310 service cost + $161 interest cost) 471

Plan assets 245 Cash (given) 245

The amortization amounts are reported as other comprehensive income in the statement of comprehensive income.

Exercise 17-12

Requirement 1 ($ in 000s) Case 1 Case 2 Case 3 Net loss or gain $320 $330 $260 Less: 10% corridor (threshold)* – 331 270 170 Excess none $ 60 $ 90 Service period ÷ 12 15 10 Amortization none $ 4 $ 9

* 10% times either the PBO or plan assets (beginning of the year), whichever is larger

Requirement 2 ($ in 000s) Case 1 Case 2 Case 3 January 1, 2009 $320 ($330) $260 2009 loss (gain) on plan assets (11) (8) 2 2009 amortization 0 4 (9) 2009 loss (gain) on PBO (23) 16 (265)