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

Date	1/1/2011	12/31/2011
Discount Rate	3.75%	4.00%
Expected Return	7.00%	7.00%
Salary Increases	4.00%	4.00%

12/31/2011

Required:

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

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

c) 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.

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