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12 March, 09:28

In 20x9, Fox Inc. has the following information related to its defined benefit pension plan: Fair value of plan assets, 12/31/x9 $ 3,350,000 Projected benefit obligation, 12/31/x8 3,300,000 Projected benefit obligation, 12/31/x9 3,150,000 Fair value of plan assets, 12/31/x8 3,100,000 Unrecognized net losses 396,000 The average remaining service period of Fox's employees is 15 years. What is the net loss amortization that Fox will include in its 20x9 net periodic pension cost?

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  1. 12 March, 09:46
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    Answer: $4,400 Loss Amortization

    Explanation:

    At the start of the year x9, Fox Inc's projected benefit obligation exceeds the fair value of plan assets. Therefore, we we will have to amortize the unrecognized gain or losses over the remaining services period which is 15 years.

    Unrecognized net losses = $396,000

    Less: Exceeding = (330,000) *

    Excess 66,000

    Divide by remaining service 66,000/15 = $4,400

    *Exceeding = beginning projected benefit obligation (3,300,000) x 10% = 330,000
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