Pension asset gain or loss has one role in the employer's benefit accounting. An asset gain or loss is the difference between actual and expected return under the supported asset policy. It connects the asset rollforward to current OCI and the AOCI gain-or-loss layer.
Apply it
Actual return of $1.05 million exceeds $900,000 expected return by $150,000. The favorable $150,000 is an asset gain rather than another reduction of current pension cost.
Common mistake
Do not assume that actual return above expected return is current pension income. The difference enters the gain-or-loss and OCI/AOCI bridge before any later amortization. That error would bypass OCI and AOCI and recognize an unsupported current-period return effect.
Keep the boundary clear
Trust fees, contributions, and benefit payments must be controlled before deriving actual return. Otherwise a missing cash flow can masquerade as a gain or loss.
Authority
Read ASC 715-30-35-22 for asset gains and losses.
Put the concept to work
Apply this concept
- Explain and apply pension asset gain or loss 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
- Expected return on plan assets — Apply
To apply this concept: Required. This prior schedule supplies a required amount or classification.