Question

The corridor approach is used to amortize

A. the over/underfunded status of a pension plan.
B. benefit payments in excess of employer contributions.
C. prior service cost obligations.
D. actual return

Answer 1

Corridor amortization is a term used when the organization's unrealized net gain or net loss exceeds 10% of the opening balance of defined benefit obligation as prescribed under the IASB criterion. The difference amount between the two should be amortized in a pension worksheet by the organization.