Ok, so my logic is below (maybe serve as a study aid, assuming it’s all true!) and then a quick question. So generally your pension contribution is considered a CFO outflow. However, you may reclassify from CFO if your contribution is > pension expense. You should reclassify to CFF outflow b/c your paying down overall pension obligation. Opposite it true: If your pension contribution < pension expense, then you reclassify as a CFF inflow because it’s kind of like borrowing to make up the difference to pay your PE (this is how I think of it…may not be exactly correct). Is this all true? And if so, what numerical adjustment is made, i.e., what is reclassified? All of the pension contribution or just the difference between the PC and the PE.?? Thanks.
I think the general idea is correct. When the contribution is greater than the pension expense, it is seen somewhat like a prepayment on a mortgage. When the contribution is less than the pension expense, i guess it is in some way like making less than the minimum pmt. on ur credit card, the difference is added back to ur balance. I believe theamount transferred from CFO to CFF is the after tax amount of the difference between the er contribution and pension expense. (er cont- pension expense) *(1-t) Please verify