FAS 87/132 Negative Charge to Equity

[Guest merlin]

This year's add'l minimum liability is less than last year's, resulting in a negative charge to equity. Is this now reported as a credit or a zero?

[Guest merlin]

Sorry, wrong terminology. The current reduction in equity is less than LY. Same question .

[MGB]

What do you mean reported? Reported where as what?

It is a "journal" entry only.

[Guest Doug Goelz]

The change in Accumulated Other Comprehensive Income flows through a company's disclosure of comprehensive income (on an after tax basis). The total of this change along with any other comprehensive income item changes will adjust the company's Accumulated Other Comprehensive Income disclosed on its Statement of Changes in Equity. This type of approach is needed to maintain the balance equation of Assets = Liabilities + Equity.

In other words, if the pension plan had a decrease in Accumulated Other Comprehesive Income, the year to year change is negative (which would be posted as a positive), and the company's equity would increase as a result. (Equity = Retained Earnings + Accumulated Other Comprehensive Income + Common Stock + Paid-In Capital)