If the projected benefit obligation of a defined benefit pension plan exceeds the fair value of the pension plan assets, the employer must report

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If the projected benefit obligation of a defined benefit pension plan exceeds the fair value of the pension plan assets, it creates a net pension liability. The employer must report this difference as a liability in the balance sheet and make a corresponding adjustment to other comprehensive income, net of deferred income taxes. This adjustment is made because the pension plan assets' fair value may change from period to period, and adjustments in the net pension liability will affect the total amount and timing of future benefit payments.

If the Projected Benefit Obligation of a Defined Benefit Pension