Hi CFAI Reading 24 Page 207 “Under US GAAP past service costs are reported in other comprehensive income…In subsequent periods, these costs are amortized over the average service lives of the affected employees and reported as a component of pension expense.” Trying to figure what the corresponding accounting entries would be: 1. past service costs are reported in other comprehensive income : Pension liability increases and equity (accumulated OCI) decreases by the same amount. is this correct?? 2. In subsequent periods, these costs are amortized and reported as a component of pension expense : if (1) above is correct, what will be the corresponding accounting entry for this step? Thanks!
My understanding is that under US GAAP you recognize say past service costs that way: DR OCI CR Pension liability. In the following periods: DR Pension expenses CR OCI. Can somebody confirm?
i am confident that CFAI wont ask you the accounting entries, although they are helpful for understanding the material, dont spend too much time on it. i cant confirm without doing more research but it looks intuitive enough for me.