Assuming GAAP. Okay, so I am quite confused with regard to how / if the difference between Expected Return on Plan Assets (ROPA) and Actual ROPA impacts the PBO. First of all, I’m aware that Schweser flat out says “return on plan assets does not impact the PBO.” (2016 Book 2, p. 100) Excellent, great, fine. I’m okay with that. It looks like it’s not in the below formula.
The formula for Ending PBO = Beginning BPO + Service Costs + Interest Costs + Prior S.C. +/- Actuarial G/L - Benefits Paid
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To me, this implies that Expected vs Actual ROPA does impact the PBO (which is presented as the net A/L under GAAP), even though conceptually it does not make sense.