[HushPuppy]

I hate that I’m even asking this, but can anyone explain the amortization net transition asset to me? In all of the Becker literature, the examples show the amortization of net transition asset (the “E” in SIRAGE) increasing net periodic pension expense. But question CPA-05400 (seen here: https://www.another71.com/cpa-exam-forum/topic/pension-question-return-on-plan-assets ) shows it decreasing the net periodic pension expense. Grrrrrr, I’m about to SIRAGE against the machine here….

[FIFOisbetterthanLIFO]

Best explanation I could find.

Transition Items result when an entity moved from FAS 8 to FAS 87 standards. If, when FAS 87 was adopted, a net obligation or net asset existed, the obligation (asset) is amortized on a straight-line basis over the remaining service life of employees expected to receive benefits under the plan or fifteen years, which ever is longer. The amortization amount is a component of pension cost. The balance not yet reported on the income statement is included in accumulated other comprehensive income. As the transition amount is amortized (part of pension cost on income statements), there is a corresponding offset on the statement of comprehensive income.

FAR - Passed (82)
BEC - Passed (76)
AUD - Passed (89)
REG - Passed! (81)
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Licensed CPA

[HushPuppy]

I appreciate you giving it a go, but I'm not sure it really answers my question. Unfortunately it seems the whole strategy of studying for the exam is based around memorization rather than understanding, so clear explanations are typically not available. Which is frustrating at best. Seems like you ran into the same problem when searching that I did.

Anyone have luck getting a refund from Becker?

[rzrbkfaith]

Amortization of a net transition ASSET is a reduction in the expense. Amortization of a net transition LIABILITY (or obligation) is an increase in the expense. Its just like gains or losses. A gain reduces the expense, a loss increases it. Hope this helps! (And I used Becker)

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[Anonymous]

Why don't we recognize the difference between the expected and actual return on plan asset as a gain, since the actual was higher than expected?

[Author]

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