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  • How is the funded status of a pension plan recorded in the financial statements?

    Funded status refers to if the pension plan is overfunded or underfunded. If the pension plan is overfunded, then the difference is recorded in the non-current asset section of the balance sheet. If the plan is underfunded, then the difference is recorded in the liability section of the financial statements. Classification between current and non-current […]

  • How are actuarial gains and losses calculated for a pension benefit obligation?

    Gains and losses are based on the difference between the actual pension payments made by the company vs the expected amount (per the actuary). If the company has actual payments that are less than the expected payment, that represents an actuarial gain. If actual payments are higher than the expected payment, that represents and actuarial […]

  • What is unrecognized prior service cost in relation to pensions?

    Unrecognized prior service cost occurs when a company has to fund pension plans for employees that occurred in prior service years. This typically happens when a company makes changes to a pension plan and they have to adjust prior year of service or if they begin to offer a pension plan and have to recognize […]