(Actuarial or Experience) GAINS AND LOSSES
Assume a company has an unrecognized loss at the beginning of 2007 of $106,000. Also, as of January 1, 2007, the company has a projected benefit obliigation of $ 819,500, and a market related asset value (fair value of plan assets) of the pension plan assets of $455,000. 

The company is required to use the Corridor approach to determine the amount of gains and losses to recognize (amortize) in pension expense each period. The corridor approach is a technique used to reduce the amounts of gains and losses to be recognized as an adjustment to pension expense.

It requires recognition of certain gains and losses in excess of 10 percent of the greater of the projected benefit obligation or the market-related asset value. The 10 percent is referred to as the corridor.

Any excess over the 10 percent should be amortized over the average remaining service period of active employees expected to participate in the plan. This amount represents the minimum amount a company can recognize.

If the gains or losses are not in excess of 10 percent of the appropriate amount, then no gain or loss may be recognized.

The purpose of the corridor is to reduce the volatility of the pension expense.  

Amortization of Gains/Losses

a. projected benefit obligation, 01/01/2007. . .  $ 819,500
b. Market related asset value, 01/01/2007. . . .  $ 455,000


10% of greater of (a) or (b) [(a) in this case] $  81,950

Unrecognized gain or loss [given in problem] . ($ 106,000)

Amount to be amortized . . . . . . . . . . . .  $  24,050

average remaining service life of employees. .       10.5

Amount to include in pension cost for 2007 . .  $   2,290