mengxu

Maybe I can help.

The PBO gets the full hit of the item, whether it be an actuarial gain, a prior service cost, or whatever. What you're confused about is the contra-account.

So for example, if we're talking about prior service cost, the PBO is credited for 100% of the liability in year 1. It doesn't matter if this is GAAP or IFRS.

However, since we're not expensing the prior service cost once, the deferred expense (a debit) has to go somewhere on the balance sheet. With GAAP, it hits equity (as a reduction). With IFRS, it gets netted up against the PBO and the plan assets.

Does this clarify things a bit?

- Robert