Ok so I get the corridor approach and how it works. Essentially, the excess above 10% of either the obligation or FV of plan assets is amortized into P/L… But it’s not clear to me yet what actually goes into OCI.
For instance (000,s):
Pension Obligation 3800
FV plan assets 4200
Actuarial G/L 450
Corridor = 420 (10% X greater of PO or FV plan assets)
Amortize 30 over employee working lives…let’s say 10 yrs
P/L shows a 3K loss.
Problem is I don’t see in the curriculum what should show up as the OCI item. Is it the full 450 actuarial loss or the corridor of 420?
The pension component of OCI would be the change in Accumulated OCI over the course of that year, so I believe OCI would include both the Actuarial Gain/Loss for that year (i.e., $450m) and the reversal based on corridor method (i.e., $3m).
In terms of changes to balance sheet accounts: an actuarial gain/(loss) would decrease/(increase) PBO and increase/(decrease) Unrecognized Gains/Losses (i.e., Accum OCI). The amortization of Unrecognized Gain/(Loss) would result in a decrease/(increase) in Accum OCI and a corresponding increase/(decrease) on the income statement.
I believe the corridor amount itself is used to determine any potential amortization for that year, but it doesn’t show up explicitly on any of the statements.