Pension obligation gain or loss has one role in the employer's benefit accounting. An obligation gain or loss arises when changed assumptions or experience alter PBO relative to the prior actuarial expectation. The actuarial movement report supplies the amount and cause.
Apply it
A supported $400,000 obligation loss increases PBO and enters the current OCI gain-and-loss layer. It is not service cost and does not describe plan-asset performance.
Common mistake
Do not assume that every change in PBO belongs in service or interest cost. Assumption changes and experience differences enter the actuarial gain-or-loss route rather than service or interest cost. That error would bury assumption and experience effects in service or interest cost.
Keep the boundary clear
Accounting explains direction and routes the supplied amount. It does not blend a participant-data correction with economic experience or choose the underlying assumption.
Authority
Read ASC 715-30-35-18 for changes in the projected benefit obligation from gains and losses.
Put the concept to work
Apply this concept
- Explain and apply pension obligation 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
- Projected benefit obligation — Apply
To apply this concept: Required. This prior schedule supplies a required amount or classification.