Compare beginning AOCI subject to amortization to the "corridor." The corridor, used to determine the materiality of accumulated unrecognized gain
or loss, is the greater of 1) 10% of the beginning balance in the PBO or 2) the market-related value of plan assets.
Under the straddle rules, when investors realized a loss on one offsetting position in actively traded personal property, they generally could deduct this loss only to the extent that the loss exceeded the unrecognized gain
in the other positions in the straddle.
For our company above, here is how the FAS 88 impact might work: Before Settlement Impact of Settlement Projected Benefit Obligation $ (100,000,000) $ 40,000,000 Assets 120,000,000 (42,000,000) Funded Difference 20,000,000 (2,000,000) Transition Obligation 5,000,000 0 Prior Service Cost 0 0 Unrecognized Gain
(35,000,000) 15,588,000 (Accrued)/ Prepaid Pension Expense $ (10,000,000) $13,588,000 After Settlement Projected Benefit Obligation $ (60,000,000) Assets 78,000,000 Funded Difference 18,000,000 Transition Obligation 5,000,000 Prior Service Cost 0 Unrecognized Gain
(19,412,000) (Accrued)/ Prepaid Pension Expense $ 3,588,000