In Its 2018 Annual Report to Shareholders, JDS Corporation Disclosed

question 172

Essay

In its 2018 annual report to shareholders, JDS Corporation disclosed the following information about its pension plan:
$$\begin{array} { | l | r | r | } \hline \text { (\$ in millions) } & \mathbf { 2 0 1 8 } & \mathbf { 2 0 1 7 } \\\hline \text { PROJECTED BENEFIT } & & \\\text { OBLIGATION } & & \\\hline \text { Beginning balance } & \$ 120.0 & \$ 102.2 \\\hline \text { Service cost } & 4.1 & 5.5 \\\hline \text { Interest cost } & 7.0 & 6.5 \\\hline \text { Benefits paid } & ( 2.6 ) & ( 4.4 ) \\\hline \text { Actuarial loss } & \underline { 6.6 } & \underline { 11.4 } \\\hline \text { Ending balance } & \$ 135.1 & \$ 121.2 \\\hline\end{array}$$
The increase in the underfunded projected benefit obligation was primarily attributable to a reduction in the assumed discount rate. This was combined with the effect of increases in benefits under the terms of the plan in excess of current inflation rates. The net result was reflected as a reduction in accumulated other comprehensive income.
-Why did the loss result in a reduction in accumulated other comprehensive income?

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Definitions:

Frequent Smokers

Individuals who smoke cigarettes, cigars, or other tobacco products on a regular or daily basis.

12Th Grade

The final year of secondary education in many countries, typically completed by students aged 17 or 18.

Lower-Nicotine Cigarettes

Cigarettes that are engineered to contain reduced levels of nicotine, potentially aiding in smoking reduction or cessation.

Addicted Smokers

Individuals who have developed a dependency on nicotine, making it difficult to quit smoking despite wanting to.