Hi guys ! I just want to be absolutely sure I understand the topic, b/c at the moments I am confused about how to display PBO changes in Balance Sheet and Income Statement. So I will tell my picture - please correct my mistakes ! ---------------- 1. Under the assumptions were made(discount rate, expected return, salary growth rate) an employer calculate PBO for the first year, say 2000 USD 2. He invests the same amount in any pension fund (2000 USD). So as Net asset/liability = 0 -> none of amounts is reflected in Balance Sheet (BS). 3. Next year -> PBO rose to 4000 USD, Investment fair value up to 2300 USD (+ additional investments 1000 -> together 3300 USD) Then Net Liability = 4000 - 3300 = 700 USD 4. So we have in BS Assets Liabilities - 3000 (Investments) +700 (Net Liability) -700*0.3 Deffered Tax Liability d -700*(1-0.3) Equity How do both parts of BS comes to equilibrium? And what do we have to reflect in Income Statement? P.S. sorry for a such flood 
Here looks better Assets Liabilities - 3000 (Investments) +700 (Net Liability) -700*0.3 Deffered Tax Liability -700*(1-0.3) Equity
Sorry, doesn’t show BS in the appropriate way I mean Assets -3000 Liabilities +700 (Net Liabil) - 700*0.3 (Def Tax) -700*(1-0.3) (Equity) = 0 No equilibrium …