Income smoothing is the concept of reducing the period to period fluctuations in revenues and expenses in order to decrease the variability of reported income GAAP generally does not support income smoothing however, a friend of yours, after studying GAAP , claims, The use of expected returns and t...

The methods by which GAAP avoids yeartoyear fluctuations in the amo ...

Income smoothing is the concept of reducing the period-to-period fluctuations in revenues and expenses in order to

Question:

Income smoothing is the concept of reducing the period-to-period fluctuations in revenues and expenses in order to decrease the variability of reported income. generally does not support income smoothing; however, a friend of yours, after studying , claims, “The use of expected returns and the corridor approach in pension accounting results in income smoothing."
Required:
Describe the methods by which avoids year-to-year fluctuations in the amount of pension expense.
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...