Sutterfield Industries is an electrical equipment manufacturer located in the Midwest. Sutterfield employs approximately 500 employees, all of which are covered by the companys defined benefit pension plan. This plan has been in effect for a number of years and historically the company has treated the difference between the plan actual return and the plan expected return as a component of other comprehensive income and amortized the balance as appropriate.

In the first quarter of 2020, the companys pension consultants made their estimates of interest costs, service cost and return on plan assets, Because of what they perceived as the detrimental impact of the COVID-19 pandemic on the economy, unemployment rates and the stock market, the consultants estimated a return on plan assets of 2%. However, as you are probably aware, the stock market recovered nicely, and in fact, set new record highs several times before the end of 2020. Sutterfields plan assets generated an actual return of 18%. The plan assets at the beginning of 2020 were $35 million.

Sutterfields sales and profits for 2020 were extremely poor for the year because many of their customers were affected by the COVID restrictions and they purchased considerably less product from the company. As a result, Sutterfield experienced a significant financial loss in 2020. To partially offset the loss, the company would like to apply the entire 18% return as a reduction of pension expense. They anticipate this to be a one time only event and anticipate returning to the practice of treating the difference between expected return and actual return as a component of other comprehensive income in future years. They have asked you for your professional opinion.

1. The first part of your report is the Question. In this section, you must identify the accounting problem. Be brief. Try to write your question in one sentence. This section should not exceed two sentences.

2. The second part of your report is the Solution. In this section, you must clearly communicate your proposed solution to the accounting problem you identified in section one. Be sure to adequately answer the question from part one, including calculations and working. Your solution should be clear and understandable such that the reader does not have to read the authoritative literature for himself/herself. Please use in-text citations!

3. The third part of your report is the Authoritative Citation(s). In this section, you must indicate the exact citation(s) from the professional accounting literature upon which you based your solution. Include a one or two sentence description of what this citation is about.

These three parts of your typed research report should be about one single-spaced page in length.

4. In addition to the research report described above, ATTACH FULL DETAILS (PRINTOUT) OF YOUR AUTHORITATIVE CITATION(S) TO YOUR REPORT.

Please use the FASB Accounting Standards Codification