bingbingliang

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There are certain events that affect PBO and Assets:

These are>

(1) Deffered Gains and Losses
which has further 2 parts

(a) Changes in acturial assumptions affecting PBO
(b) Difference between actual and expected return on PA (As only Expected return goes to pension expense, you will have to take care of actual return)

You Net (a) and (b)

Now you compare this "NET" amount to either Opening balance of PBO or PA and if this "NET" amount exceeds 10% of PBO or PA, you can amortize it over the remaining life of the employee. (This 10% limit is called corridor method)

You have the choice to amortize only the EXCESS amount over PBO/PA or you can amortize the whole amount.

(2) Prior Service Adjustments
(3) Transition Assets / Liability
(There is no corridor method for 2 & 3 so they are simply amortized by the remaining life)
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Under US GAAP these elements are in Balance Sheet and Amortized over time
Under IFRS these are kept Off Balance Sheet and Amortized over time

Hope it made sense, Please correct me if you find any mistake