BUMP!!!

Deferred Tax as it relates to Pensions are confusing me BIG TIMEE!!!  :-(  **cries**

ok, let me try to explain this how I understand it....

the amount that pertains for the current year is recorded under AOCI

the amount that needs to be amortized (i.e: the future years will benefit from it, as it will be a deduction from Income, in future years) is treated as a Deferred Tax Asset

If you are using Becker- it pertains to the 'AGE' component of 'SIRAGE'

Amortization of Prior Service Cost, Losses, Net Obligation- Def Tax Asset

Unamortized of the above- record in AOCI

Okay--what about this:

Chapter 6, page 16

Why is it that SOMETIMES the expense or the loss hits OCI--and other times it doesn't?  (see page 16 journal entries:  the 2nd vs 3rd one for example)

ALSO...and more important:

Why is it that the amortization of prior service costs, for example, INCREASES the OCI? 

Hmmm...I thought that OCI held UNamortized costs...which would in turn mean that when you AMORTIZE it...you should DECREASE the OCI?

Gosh, I'm so confused with this?
I've stared at this page all day waiting on a "light bulb moment"????  (never happened)

When you initially recorded unrecognized prior service cost, unrecognized net loss and unrecognized net transition obligation, your entry was:-

DR  OCI

CR Pension Benefit liability

It means that you didn’t recognize the total unrecognized costs for the above three items in your income statement.

Now, every year, you amortize a portion of these unrecognized items in your income statement.

The entry now becomes:-

DR Net periodic pension cost (IS)

CR OCI

You reverse a portion of the unrecognized costs from OCI and transfer it to your income statement.

The OCI was decreased in the first journal entry and after you transfer a portion of the costs to IS, OCI gets increased or in the other words, net effect is zero for that portion of the costs which are amortized.