FAS Curtailment

[Blinky the 3-eyed Fish]

I preface this by saying a FASB expert I am not. Now that we are clear on that, the plan has the following:

Unrecognized net loss: 1,000,000

Transition asset: 50,000

Reduction in PBO due to curtailment: 200,000

My focus is specifically on the transition asset as it affects the net periodic pension cost. I understand when determining if there is a curtailment gain that the transition asset is first netted against the unrecognized loss. Then the reduction in PBO is compared to the net to see if there is a gain. (1,000,000 - 50,000 = 950,000 > 200,000 - therefore no gain)

But for the NPPC is the net unrecognized net loss (i.e. 950,000) used to determine the amortization of the loss or does the transition obligation remain separate?

Thanks.

[Guest baxjac]

The Unrecognized net loss of 1,000,000 will be decreased in recognition of the curtailment gain. The transition asset remains separate. For NPPC (after consideration of the curtailment) the transition asset amortization will remain unchanged and the unrecognized loss amortization will likely change based on the new unrecognized loss amount that now exists.

Question 52 of the FAS 88 Q&A statement (along with illustration 5) backs this up.

Hope this clears things up.