Can someone shed some light on the change in rule for me… a bit confused in what has changed…netting is the same…is it that now unrecognized amounts from prior years is not amortized but added or subtracted at one shot???
Old Rule = They took the funded status and then re-adjusted it by the amortization of prior serivce costs, actuarial gains/losses etc. that went through the calculation of PBO earlier - so they were basically removing items already included New Rule = Show Funded Status on balance sheet = no adjustments to be made… FV of Plan Assets - PBO is what goes on the balance sheet …period
Then generally speaking, liabilities are going to be larger under the new rule because you are no longer making those adjustments.
so the funded status under old rule was = FMV - adj. PBO New rule = FMV - PBO IFSR is still under old rule correct?
it depends…on whether the adjustment you are making have a net positive or negative effect…your gains could be larger than your losses - or the other way around…there isn’t a rule to it… you’d have to go with the numbers in the particular question
what’s important is that the new rule reflects economic situation on the BS but not IS. The old rule doesn’t reflect economic situation in either BS or IS.
^^ good point
Because Pension Expense is still adjusted for various items right? Pension Expense = Int + Ser. Cost - Expected Return on Plan Assets ± Amort. or various items… Correct??
chadtap Wrote: ------------------------------------------------------- > Because Pension Expense is still adjusted for > various items right? > > Pension Expense = Int + Ser. Cost - Expected > Return on Plan Assets ± Amort. or various > items… > > Correct?? thats correct.