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Pension data for Sterling Properties include the following: ($ in 000s)
Required: Assume Sterling Properties prepares its financial statements according to International Financial Reporting Standards.
6% is the interest rate on high grade corporate bonds.
Determine the net pension cost.
| Service cost, 2018 | $ | 139 | |
| Projected benefit obligation, January 1, 2018 | 800 | ||
| Plan assets (fair value), January 1, 2018 | 900 | ||
| Prior service cost–AOCI (2018 amortization, $8) | 99 | ||
| Net loss–AOCI (2018 amortization, $2) | 120 | ||
| Interest rate, 6% | |||
| Expected return on plan assets, 10% | |||
| Actual return on plan assets, 11% |
♦ Relevant knowledge
Net annual pension costs are the expense of a pension plan during an annual reporting period as reported in the company’s financial reports. The cost comprises the following elements:
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Actual return on plan assets
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Amortization of the cost of prior services or credit
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Gain or loss
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Cost of interest
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Cost of service
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