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.
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