The element DefinedBenefitPlanActuarialGainLoss appears in the roll forward of the benefit obligation. An actuarial gain will decrease the obligation and an actuarial loss will increase the obligation. In the US GAAP taxonomy, this element is represented as an addition to the obligation. Therefore, any gains could be entered as a negative and any losses entered as a positive. However, in the US GAAP taxonomy, the element is modeled as a credit and the label indicates that the loss should be entered as a negative.
The accounting journal for this entry will typically be as follows for an actuarial gain:
- DR Defined Benefit Obligation – Actuarial assumptions – Gain XXX
- CR Other Comprehensive Income XXX
There is a credit element in the US GAAP taxonomy to recognize this amount called DefinedBenefitPlanActuarialGainLoss. The ambiguity for filers occurs when deciding which side of the journal entry does the element represent. Does it represent item 1 the decrease in the pension obligation or item 2 a gain or increase in Other Comprehensive Income.
The committee discussed this item at length. From one perspective the positive calculation weight indicates that it is item 1 and a gain is entered as a negative. The contra perspective was that the parenthesis around the word “Loss” on the label meant a gain be entered as a positive and the element therefore was the impact on AOCI or item 2. In addition members decided that the committee should follow the principle that if in doubt the filer should take the journal from the impact on AOCI or income.
In the past the committee issued guidance on determining a sign of a roll forward element in the May 31st guidance. This did not address this case specifically and recommended using the appropriate sign for a two way element.
In the interim the committee decided to recommend that the gain for this item be entered as a positive amount and consider the element to be the AOCI side of the transaction. This element could then be used in the calculation of the obligation but would require the calculation weight to be changed from that in the US GAAP taxonomy.
This is a recognized issue in the taxonomy and the FASB will investigate clarifying this issue later in 2014 as part of a pension implementation guide. Many companies today enter the gain as a positive and many enter a gain as a negative. This guidance is intended to eliminate the ambiguity around this element, which is tagged inconsistently, and eliminate any confusion for consumers of the data.
If the filer uses the element DefinedBenefitPlanActuarialGainLoss to represent a gain, the amount should be entered as a positive value. If it is an actuarial loss, the amount should be entered with a negative value.
If the amount is a gain, the element in the calculation of the roll forward showing the change of the benefit obligation would be changed from an addition to a subtraction by changing the weight in the calculation. This is only required when a calculation is defined for the roll forward using the increase decrease element for the benefit obligation.