Question
Lee Company has a defined benefit pension plan. During 2015, for the first time, Lee experienced a difference between its expected and actual projected benefit
Lee Company has a defined benefit pension plan. During 2015, for the first time, Lee experienced a difference between its expected and actual projected benefit obligation. At the beginning of 2016, Lee's actuary accumulated the following information related to Lee's pension plan: Net loss (1/1/2016) $44,000 Actual projected benefit obligation (1/1/2016) 228,000 Fair value of plan assets (1/1/2016) 260,000 On December 31, 2016, Lee is in the process of computing the net gain or loss to include in its pension expense for 2016. Lee has determined that the average remaining service life of its employees is 9 years. There was no difference between the company's expected and actual return on plan assets in 2016.
Required: Compute the amount of the net gain or loss to include in the pension expense for 2016, assuming that Lee uses the corridor approach. Indicate whether it is an addition to or a subtraction from pension expense.
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