My dumbed down Accounting for Pension Expense.

I suggest Bloodline recieves a thousand AF points because of this post!
 
One more question guys!
Under GAAP, do we amortize the hole bin ie. OCI (actuarial G/L, past servise cost and difference between expected and actual return) using corridor approach or only acturial G/L and the rest just stays in the bin?
 
kobi wrote:
One more question guys!
Under GAAP, do we amortize the hole bin ie. OCI (actuarial G/L, past servise cost and difference between expected and actual return) using corridor approach or only acturial G/L and the rest just stays in the bin?
Click to expand...
From what you wrote I guess we should amortize past servise cost over the life of employees and actuarial g/l using corridor approach. But do we amortize difference between actual and expected returt at all?
 
Great summary, great putting a little uplifting approach to a demoralizing subject!
 
kobi wrote:
One more question guys!
Under GAAP, do we amortize the hole bin ie. OCI (actuarial G/L, past servise cost and difference between expected and actual return) using corridor approach or only acturial G/L and the rest just stays in the bin?
Click to expand...
My understanding of this is that under GAAP, past service cost is amortized into the income statement by dividing the amount of past service cost by the total number of employee years. So in each period for the income statement, you will have a portion of your income expense relating to amortized portion of past service cost.
The rest of the OCI (gains/losses, expect minus actual, remeasurements) get amortized based on the corridor approach.
 
So corridor approach apllies to actualrial losses and difference between expected and actual return?
It is not implicitly stated in CFAI text.
EDIT: ok
 
kobi wrote:
So corridor approach apllies to actualrial losses and difference between expected and actual return?
It is not implicitly stated in CFAI text.
EDIT: ok
Click to expand...
here’s what the book says


“thus, under U.S. GAAP, differences between the expected return and the actual return on plan assets represent another source of actuarial gains or losses.

As noted, actuarial gains and losses can also result from changes in the actuarial assumptions used in determining the benefit obligation. Under U.S. GAAP, all actuarial gains and losses are included in the net pension liability or net pension asset and can be reported either in P&L or in OCI

Typically, companies report actuarial gains and losses in OCI and recognise gains and losses in P&L only when certain conditions are met under a so-called corridor approach.”
(Institute 178)
 
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