Pension corridor amortization has one role in the employer's benefit accounting. Corridor amortization applies a supported recognition policy to an opening net gain or loss. It compares that layer with the policy threshold and amortizes the excess over a supported period.
Apply it
A $2.6 million opening loss exceeds ten percent of the greater of $18 million PBO and $15 million market-related assets by $800,000. Over ten years, amortization is $80,000.
Common mistake
Do not assume that the corridor erases gains and losses below its threshold. The corridor governs minimum amortization from AOCI; it does not remove the underlying accumulated amount. That error would lose accumulated gains or losses that remain part of AOCI below the threshold.
Keep the boundary clear
The calculation does not select a policy, threshold base, or service period. A permitted faster-recognition policy follows its own documented method.
Authority
Read ASC 715-30-35-24 for minimum amortization of a net gain or loss.
Put the concept to work
Apply this concept
- Explain and apply pension corridor amortization 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.