Heres something I kinda knew but didn’t have the full story. If econ pension>contributions -> financing cash inflow and operating cash outflow If econ pension financing cash outflow and operating cash inflow. I just thought it was a financing cash inflow if econ pension>contributions. I didn’t take it to the above detail.
The difference between economic pension expense and the amount funded into the pension plan gets to reclassified from operation cash flow to financing cash flow. When you underfunded your plan then it’s equivalent to borrowing money from the plan so it is an increase in financing cashflow. When you overfunded your plan, it’s equivalent to paying back what you borrowed before so it’s a decrease in financing cashflow.
adee1031 Wrote: ------------------------------------------------------- > The difference between economic pension expense > and the amount funded into the pension plan gets > to reclassified from operation cash flow to > financing cash flow. > When you underfunded your plan then it’s > equivalent to borrowing money from the plan so it > is an increase in financing cashflow. > When you overfunded your plan, it’s equivalent to > paying back what you borrowed before so it’s a > decrease in financing cashflow. Yeah, but if you read the original post a bit more carefully, he is saying an underfunded plan would result in an increase in financing cash inflow and operating cash outflow.
think about it logically -ending cash needs to be the same - any changes on the c/f statement would be reclasses so if something went up, another category must go down