(L01,4,5) (Amortization of Accumulated OCI Balances) Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan.

January 1, December 31, 2017 2017 2018 Projected benefi t obligation $2,800,000 $3,650,000 $4,195,000 Accumulated benefi t obligation 1,900,000 2,430,000 2,900,000 Plan assets (fair value and market-related asset value) 1,700,000 2,900,000 3,790,000 Accumulated net (gain) or loss (for purposes of the corridor calculation) –0– 198,000 (24,000)

Discount rate (current settlement rate) 9% 8%

Actual and expected asset return rate 10% 10%

Contributions 1,030,000 600,000 The average remaining service life per employee is 10.5 years. The service cost component of net periodic pension expense for employee services rendered amounted to $400,000 in 2017 and $475,000 in 2018. The accumulated OCI (PSC) on January 1, 2017, was $1,260,000. No benefits have been paid.

Instructions

(Round to the nearest dollar.)

(a) Compute the amount of accumulated OCI (PSC) to be amortized as a component of net periodic pension expense for each of the years 2017 and 2018.

(b) Prepare a schedule which reflects the amount of accumulated OCI (G/L) to be amortized as a component of pension expense for 2017 and 2018.

(c) Determine the total amount of pension expense to be recognized by Keeton Company in 2017 and 2018.