Gains and Losses
- Amortization is required as a component of pension expense if, at the beginning of the year, the absolute value of the net unrecognized gain or loss exceeds 10% of the greater of:
- The PBO or
- The plan assets
- This 10% is referred to as the “corridor”:
- If accumulated gains and losses are not greater than 10%, do not include their amortization in current pension cost.
- Amortized gains reduce pension cost; losses increase it.