Problem 20-1

On January 1, 2017, Pronghorn Company has the following defined benefit pension plan balances.

Projected benefit obligation		$4,463,000
Fair value of plan assets		4,190,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2018, the company amends its pension agreement so that prior service costs of $505,000 are created. Other data related to the pension plan are as follows.

		2017			2018
Service cost		$148,000			$177,000
Prior service cost amortization		0			90,000
Contributions (funding) to the plan		241,000			287,000
Benefits paid		200,000			285,000
Actual return on plan assets		251,400			255,000
Expected rate of return on assets		6	%		8	%