Accumulated Benefit ObligationProjected Benefit Obligation

Accumulated Benefit Obligation-based on current and past compensation levelsProjected Benefit Obligation-uses assumptions of future compensation levels

Ending PBO formula

Beginning PBO+Service Cost+Interest Cost+Prior Service Cost Amort+Actual Losses-Actual Gains-Benefits paid=Ending PBO

Actual return on plan assets formula

Beginning Fv of plan assets+contributions+actual return (plug)-benefits paid =Ending Fv of plan assets

Net periodic pension expense formula

SIRAGES-Service CostI- + Interest costR- <Return on plan assets>A - +Amortization of Prior Service CostG - <Gains> + LossesE- Amortization of existing obligation/asset=Net periodic pension expense

Formulas for:-Interest Cost-Expected Return-Amortization of Prior Service Cost-Gains and Losses-Amortization of Existing Obligation/Asset

1. Interest CostBeginning PBO* Discount Rate2. Expected ReturnBeginning FV of assets * expected rate of return3. Amortization of prior service costsunamortized service cost/average remaining service period4. Gains/LossActual return - Expected return (positive = gain)AND any changes in actual assumptions5. Amortization of Existing ObligationPBO-FV of planned assets=initial unfunded obligation/ Greater of : 15 years or average employee job life=minimum amortization

Accounting for gains and losses

-either recognize in period incurred in income statement-OR recognize in OCI and amortizeUnrecognized G/L- Greater of: 10% beg PBO or market related value=Excess/average remaining life=amortization of unrecognized gain/loss

Funded Status Formula

FV of plan assets-PBO=Positive =overfunded=Negative = underfunded