Giant Jobs, Inc. amended its overfunded pension plan on December 31, 20X7, resulting in the recognition of prior service cost of $700,000.  On December 31, 20X7, Giant Job’s employees had an average remaining service life of 20 years.  The company has an effective tax rate of 30%.  How should the prior service cost be reported in the December 31, 20X7 financial statements?

Ans- $490,000 decrease in comprehensive income.

How to come up with $490,000 decrease in comprehensive income?? I thought $490,000 increase of Accumulated other comprehensive income?? I am very confused !

 I think this is the reason in my opinion, Correct me if I wrong

Comprehensive income = Net income + OCI

so net income + (490,000)

is going to decrease your comprehensive income

Thanks, gottatocpa.

The part that I didnt understand was I don't know to what direction we store those to-be-amortized amout in OCI. For example, the prior service cost, when we store it in OCI, do we Debit OCI and credit defered pension liability? And when the amoirtization of prior service cose takes place, do we credit OCI and debit pension cost?

Somebody seemed already answered the question in other posting. I would just like to make sure I understand it correctly.

Thanks!