Question

Shin Corporation had a projected benefit obligation of \(3,100,000 and plan assets of \)3,300,000 at January 1, 2017. Shin also had a net actuarial loss of $465,000 in accumulated OCI at January 1, 2017. The average remaining service period of Shin’s employees is 7.5 years. Compute Shin’s minimum amortization of the actuarial loss.

Short answer

Actuarial loss is a term used when an organization bears a specific decrease in projected benefit obligation. It is highly influenced and affected by the discount percentage used in ascertaining the plan’s future worth.

Step-by-step solution

Given the amounts:

Particulars	Amount
Projected benefit obligation	$3,100,000
Plan assets as on Jan 1, 2017	$3,300,000
Actuarial loss	$465,000
Average remaining service period	7.5 years

Computation of Shin’s minimum amortization of actuarial loss.

Particulars	Amount
Net loss in accumulated OCI	$465,000
Less: Corridor $(\$3,300,000\times \frac{10}{100})$	$330,000
Excess	$135,000
Divide: Average remaining service life	7.5 years
Minimum amortization of the actuarial loss	$18,000