What Is the Minimum Liability as It Relates to Reporting

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The Answer is FASB ASC 715 requires recognition of a liability, termed the minimum liability, when the accumulated benefit obligation exceeds the fair value of the plan assets. Thus, even though future salary levels are used to calculate pension expense, the liability reported on the balance sheet
need take into consideration only present salary levels. The result is that the balance sheet and income statements are not articulated, a condition that is contrary to the conceptual framework.
The portion of the underfunded pension obligation that is not already recognized in the
accounting records occurs because the company has unamortized prior service cost or unamortized gains and losses. Because the minimum liability is based on current salary levels and is therefore likely to be less than the underfunded projected benefit obligation, total unamortized prior service cost and unamortized gains and losses are likely to exceed the amount needed to increase the pension liability to the minimum required

What Is the Minimum Liability as It Relates to Reporting

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