Pension amortization reclassification has one role in the employer's benefit accounting. Amortization reclassifies a supported prior-service or gain-and-loss amount from AOCI into periodic cost. It reduces the accumulated layer without changing PBO or plan assets on that date.
Apply it
A $120,000 prior-service reclassification and an $80,000 net-loss reclassification add $200,000 to cost and remove $200,000 from the related AOCI layers.
Common mistake
Do not assume that amortization creates a new pension gain or loss. Amortization reclassifies an existing AOCI amount into periodic cost and must reduce the related AOCI balance. That error would count one economic change twice instead of moving an existing AOCI amount into periodic cost.
Keep the boundary clear
Reclassification is not a new economic loss. Counting it as both new OCI and cost would duplicate the same amount in comprehensive income.
Authority
Read ASC 715-20-55-11 for reclassification from AOCI into pension cost.
Put the concept to work
Apply this concept
- Explain and apply pension amortization reclassification within a reconciled employer benefit-plan workpaper using supplied authoritative and actuarial facts.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Pension accumulated other comprehensive income — Apply
To apply this concept: Required. This prior schedule supplies a required amount or classification.