fas 87, 158

[Gary]

I have one client that needs a fasb report.

the prior actuary prepared the 2009 fasb report incorporating expected return on assets as a component of 2009 net periodic pension cost. this computation was done in 2010 after the actual return on assets was known.

in preparing the 2010 net periodic pension cost here in 2011 I am thinking that it is more appropriate to use actual return on assets instead of expected return on assets as a component of 2010 net periodic pension cost. I sent the report out prepared in the same manner as was done last year, but I have second thoughts re: that aspect.

On the flip side if actual return on assets is used then it seems that the entire asset gain would have been fully recognized and thus no additional gain would need to be recognized or folded into the unrecognized total net gains.

Any views on this?

For the 2011 projection of net pension cost using expected return of course makes sense.

thanks.

[quinnfield]

Your approach is OK, except that the ROA assumption should be set at the beginning of the measurement period with the difference between expected return and actual return deferred into the unrecognized gain/loss. It always comes down to what the firm's auditors find acceptable.

[JAY21]

I always understood that FAS 87 net periodic pension cost "disclosed" the actual rate of return as a component but then the other component of net periodic pension cost "deferred gains/losses due to investment performance" (or something like that) adjusted it right back to the expected rate of return for the final result.