FASB 87 (balancing equation)

[Guest RSNOW]

Takeover Plan: Prior year FASB had a prepaid pension cost but then reflected the Additional Liability to adjust balance sheet liability to equal the unfunded accrued liability (ABO-Assets).

Current Year: Assets are greater than the ABO (barely) so I believe the Additional Liability goes away, but I'm unsure if my year-to-year balancing equation (prior year Accrued Liab. + periodic pension cost - contrib.) starts with last years Balance Sheet Pension liability (which reflects the Add'l Liab.) or whether it starts with the prior year prepaid pension costs (ignoring the prior year Additional Liability for this purpose) ?

Also I believe MGB previously mentioned that once assets > ABO again (this year) that the prior prepaid cost will reappear on the books (net of any periodic pension costs since that time). What adjustments do I need to show for this ? There is only 1 year of net periodic pension since the Add'l Liab. applied.

[david rigby]

The "roll-forward" (someone else probably has better phrase) always starts with last year's (Accrued) or Prepaid Pension Account. Do not reflect any Additional Liability.

Yes, when the Asset - ABO becomes positive again, the Additional Liability and Intangible Asset vanish. Presumably, the financial statements for those accounts show whatever item is necessary to "zero out".

For some background, see Illustration 5 (pages 102-111) in the the original SFAS87. Also, see Q&A-34 in the "Guide to Implementation of Statement 87"

[Guest RSNOW]

Thanks Pax !