Panther Company currently sponsors a defined benefit

pension plan for #2603

Panther Company currently' sponsors a defined benefit pension plan for its employees. At the
end of 2016, the plan had a projected benefit obligation of $1,456,000 and fair value of plan
assets of $1,629,000. Panther recognized a net pension asset in its balance sheet of $173,000
at the end of 2016. Due to the plans overfunded position, Allison Costello, Panther’s CFO, is
interested in finding out if it is possible to settle or curtail the plan. Specifically, she is interested
in purchasing a portfolio of high -quality' bonds that have principal and interest payment dates
very similar to the estimated dates pension benefits would be paid.Directions1. Research the
GAAP and prepare a short memo to Allison Costello that provides guidance on the following
issues:1. What is a pension settlement and pension curtailment?2. Can the company recognize
a gain or loss if it settles its pension plan? What is the amount of the gain or loss?3. Can the
company recognize a gain or loss if it curtails its pension plan? What is the amount of the gain
or loss?4. Would Allison Costello’s plan of purchasing high quality' bonds qualify' as a
settlement of a pension plan? Why or why not?View Solution:
Panther Company currently sponsors a defined benefit pension plan for

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