O'Reilly Corporation sponsors a defined benefit pen

sion plan for its employees. The long run

expected rate of return on plan assets is 10% and t

he settlement rate is assumed to be 9%. The

enacted tax rate is 40%. O'Reilly uses the straigh

t-line method to amortize PSC and the corridor

method to amortize gains and losses. No plan amend

ments are made during 2007.

The following balances relate to this plan as of

12/31/06

:

Plan assets (actual fair value)

$5

20,000

Projected benefit obligation

757,000

Unrecognized past service cost

81,000

Unrecognized pension losses

132,000

Average remaining service life of active employees

10

Average remaining service life of employees active

when plan amended

8

The following additional information about the oper

ation of the plan during 2007 is provided by

the plan actuary or the pension plan fund manager:

Service cost

$98,000

Actual return on plan assets

42,000

Funding (paid by O'Reilly to pension fund on 12/31/

07)

128,000

Benefits paid to retirees (from pension fund on 12/

31/07)

85,000

Actual projected benefit obligation (PBO) on 12/31/

07

850,000

Required

:

A.

Determine the amount of pension gain or loss to be

amortized in 2007.

B.

Compute O'Reilly's PBO loss or gain in 2007.

C.

Compute O'Reilly's asset loss or gain in 2007.

D.

What is O'Reilly's unrecognized gain/loss balance a

t the end of 2007?

E.

Compute O'Reilly's PSC amortization in 2007. Assume that O'Reilly has only amended its

plan once in the past.

F.

Complete the pension worksheet for 2007.

G.

Write journal entry for O'Reilly's 2007 pension activity.