Indigo Corporation: Minimum Amortization of Actuarial Loss Calculation
Calculation of Indigo Corporation's Minimum Amortization of the Actuarial Loss
Indigo Corporation had a projected benefit obligation of $3,386,000 and plan assets of $3,617,000 at January 1, 2020. Indigo also had a net actuarial loss of $528,020 in accumulated OCI at January 1, 2020. The average remaining service period of Indigo’s employees is 7.70 years. Now, let's compute Indigo’s minimum amortization of the actuarial loss.
Minimum Amortization of the Actuarial Loss
Answer:
Amortized to pension expense $21,600
Explanation:
Computation of Indigo’s minimum amortization of the actuarial loss:
Projected benefit obligation: $3,386,000
Plan assets: $3,617,000
Corridor percentage: 10%
Corridor amount: $361,700
Accumulated loss: $528,020
Excess loss subject to amortization: $166,320 ($361,700 - $528,020)
Average remaining service: 7.70 years
Amortized to pension expense: $21,600 ($166,320 ÷ 7.70)
Therefore, the minimum amortization of the actuarial loss for Indigo Corporation will be $21,600.
What were the key figures in the calculation of Indigo Corporation's minimum amortization of the actuarial loss? The key figures in the calculation include the projected benefit obligation, plan assets, net actuarial loss, corridor percentage, corridor amount, accumulated loss, excess loss subject to amortization, and the average remaining service period of employees.