Prepare the appropriate journal entry to record gain or loss

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Open Arms Industries has a noncontributory, defined benefit pension plan. During 2013, changing economic conditions caused the actuary to increase the assumed rate of salary progression. Required:

1. Does the change create a gain or does it create a loss for Open Arms? Why?

2. Assuming the magnitude of the change is $7 million. Prepare the appropriate journal entry to record any 2013 gain or loss. (Ignore income taxes.) If Open Arms prepares its financial statements according to U.S. GAAP, how will the company report the gain or loss?

3. Would your response to question 2 differ if Open Arms prepares its financial statements according to International Financial Reporting Standards?

Reference no: EM13846837

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