Year O

On December 31, 2010, Arrieta Incorporated purchases a subsidiary of Sales Unlimited. Sales has a defined benefit pension plan. The actuary provides you the following information:

	12/31/2010
	(000s)
Statement of financial position
Benefit obligation	2,750
Fair value of plan assets	2,650
Funded status 12/31/2010	-100
Expected impact of plan alignment	360

The initial amount to be recognized on the books of Arrieta for initial recognition of the funded status of the Sales pension plan is:

Benefit obligation	2,750
Fair value of plan assets	2,650
Funded status 12/31/2010	(100)

Year 1

On July 1, 2011 Arrieta amends the plan to align the benefits with its own plans, retroactive to the date of employment for the acquired employees. The retroactive benefits result in a prior service cost. The remaining service lives of those employees (average time to retirement) is 12 years.

The actuary presents you with the following information as of 12/31/2011

Service cost	110
Interest cost	115
Expected return on plan assets	182
Actuarial gain/(loss)	20
Plan amendment	360
Actual return on plan assets	150
Benefits paid	(75)
Employer contributions	35
		1/1/2011	12/31/2011
Discount rate		3.75%	4.00%
Expected return		7.00%	7.00%
Salary increases		4.00%	4.00%

Required:

1. Prepare the disclosure for the change in plan obligation and the change in plan assets for the year and determine the ending funded status.

2. Prepare the disclosure for the net period benefit cost (i.e., pension expense) for the period.

3. Describe how you will account for prior service costs (i.e. which accounts will be affected on the balance sheet and by how much). Provide ASC references to support the accounting for the prior service cost.

4. Determine the amount of any amortization of gains and losses for the following year. Provide ASC references to support the calculation.

I'm mostly focused on how to figure out parts 3 & 4