OCI Confusion- Pensions

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    Topic
  • #1497406
    nk522
    Participant

    Hi everyone,
    I am hoping someone can clear this up for me because I am getting pretty frustrated.

    In Pensions, Tim Gearty talks about “taking out of AOCI” and then shows a journal entry with a Credit to OCI. OCI is an equity account though so based on that journal entry isn’t he “putting it into OCI.?”

    The journal entry looks something like this, and there are a lot of these scattered through the chapter:

    DR. Net Periodic Pension Cost
    CR. OCI

    Can someone please dumb this down for me? I think theres a huge piece of the puzzle that I’m missing but I cannot seem to figure it out 🙁

    AUD- PASSED 11/16

    BEC- PASSED 12/16

    REG- PASSED 1/17

    FAR- PASSED 3/17

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  • #1497451
    waffle_house
    Participant

    S- service cost = given and in current I/S

    I- Interest cost from Beg PB0 x discount rate = goes to I/S

    R- Actual rate of return from Beg FV of Plan Assets x expected or actual return rate (difference goes to AOCI)

    A- Amortization Prior Service cost (full amount goes to AOCI and is getting amortized out of AOCI) DR Pension Cost CR OCI <——–taking it out

    G- Gain amortization (difference between expected and actual return from “R” above) you amortize this using the corridor approach then the JE is: DR OCI CR Pension Cost <—–taking the GAIN out, notice it is different than above which was an expense

    E- Nobody cares about this

    Remember when you put something in AOCI you are essentially putting it in the B/S to later re class out and put it in the I/S, the JE rules of expenses and gains remain the same….

    AUD - 80
    BEC - 75
    FAR - 84
    REG - 76
    Exams started Sep 2014 -Exams done Mar 2017

    Texas CPA

    I put in work, it was evident

    #1497688
    Goingallin
    Participant

    I hated Pension for FAR. Spent some much time on it and can't remember having one darn question on it. I'm guessing its not popular since most companies don't even have it anymore. Waste of time.

    AUD - 87
    BEC - 77
    FAR - 75
    REG - 82
    donotgiveup!!
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