Question

At the beginning of 2018, Moony, Inc. has a cumulative net actuarial loss in AOCI of $50,000 in its pension plan. The estimated remaining service period of active employees is 12 years for both years.

	2018			2019
Beginning plan asset value	$	335,000		$	350,000
Beginning projected benefit obligation		325,000			385,000
Current year gain or (loss)		(37,500	)		25,000

The corridor for amortization for 2019 is:

Multiple Choice

• $38,500.

• $0.

• $35,000.

• $25,000.

Answer 1

The correct option is A : $38,500

The threshold amount equal to 10% of beginning balance of projected benefit obligation or 10% of beginning balance of plan assets, which ever is higher is referred to as corridor. the corridor for amortization in 2019 is 10% of beginning balance of projected benefit obligation as this amount is higher when compared to beginning balance of plan asset.

Corridor threshold = $385,000 × 10%

=$38,500.