Panther Company currently sponsors a defined benefit pension plan for its employees. At the end of 2016, the plan had a projected benefit obligation of $1,456,000 and fair value of plan assets of $1,629,000. Panther recognized a net pension asset in its balance sheet of $173,000 at the end of 2016. Due to the plans overfunded postion, Allison Costello, panther's CFO, is interested in finding out if it is possible to settle or curtail the plan. Specifically, she is interested in purchasing a portfolio of high quality bonds that have principal and interest payment dates very similar to the estimated dates pension benefits would be paid.

Directions

1. Research the GAAP and prepare a short memo to Allison Costello that provides guidance on the following issues:

- What is a pension settlement and pension curtailment?

- Can the company reconginze a gain or loss if it settles its pension plan? What is the amount of the gain or loss?

- Can the company recongize a gain or loss if it curtails its pension plan? What is the anount of the gain or loss?

- Would Allison Costello's plan of purchasing high quality bonds qualify as a settlement of a pension plan? Why or why not?

**Please reference GAAP and use APA format***