Question: Net Gain or Loss Hudson Company's actuary has provided the following information concerning the company's defined benefit pension plan at the end of 2013:

Fair value of plan assets (1/1/2013) $350,000

Actual projected benefit obligation (1/1/2013) 360,000

Expected projected benefit obligation (1/1/2013) 424,000

Average remaining service life of employees 10 years

The difference between the actual and expected projected benefit obligation first occurred in 2012.

1) Compute the amount of the gain or loss for the Hudson's pension plan at the beginning of 2013.

a) Gain at the beginning of 2013 $ xxxxxx DONE BELOW

2) Compute the amount of the net gain or loss to include in Hudson's pension expense for 2013. Indicate whether it is an addition to or a subtraction from pension expense. a) Net gain recognized in 2013 subtracted from pension expense $ xxxxx (need answer)

1.a. Since the actual projected obligation is less than the expected projected obligation, there is a gain. Gain = Expected projected benefit obligation Actual projected benefit obligation = $424,000 - $360,000 = $64,000 CORRECT!

2.b. Since the actual projected benefit obligation is higher than the fair value of plan assets, there is a net gain. Net gain = Actual projected benefit obligation Fair value of plan assets = $360,000 - $350,000 = $10,000 Pension expense should be subtracted by the amount of net gain, $10,000 is not correct----- NEED ANSWER FOR #2b