2 Flashcards
For a defined benefit pension plan, the discount rate used to calculate the projected benefit obligation (PBO) is determined by the
Assumed discount rates are used to measure the PBO. They reflect the rates at which benefits can be settled. In estimating these rates, it is appropriate to consider current prices of annuity contracts that could be used to settle pension obligations as well as the rates on high-quality fixed investments
GAAP normally require entities to account for share-based employee compensation awards classified as equity in accordance with which of the following methods?
Entities must account for share-based payments classified as equity in accordance with the fair-value method except in the rare cases in which a nonpublic entity cannot reasonably estimate the fair value of the equity instruments at the grant date. In these cases, entities must account for such payments in accordance with the intrinsic-value method.
Under IFRS, past service cost is
Under IFRS, past service cost is recognized as pension expense at the earlier of (1) when the plan amendment or curtailment occurs or (2) when the entity recognizes related restructuring costs or termination benefits.
what is the requirement for the accruing the compensation expenes
In general, GAAP require an accrual for compensated services when the compensation relates to services previously provided, the benefits either vest or accumulate, and payment is both probable and reasonably estimable. An exception is made for sick pay benefits, which must be accrued only if the rights vest.
Under IFRS, which of the following statements is true regarding a defined benefit pension plan?
Under U.S. GAAP, different interest rates ordinarily are used to calculate interest cost and the expected return on plan assets. Under IFRS, the same rate is used to discount the defined benefit obligation (interest cost) and to calculate interest income on plan assets.
How should plan investments be reported in a defined benefit plan’s financial statements?
The annual financial statements of a defined benefit pension plan must include information about the net assets available for benefits at the end of the plan year. Plan investments, whether equity or debt securities, real estate, or other (excluding insurance contracts) must be presented at their fair value at the reporting date.
Under IFRS, which of the following statements is true, regarding remeasurements of the defined benefit obligation?
Remeasurements of the defined benefit obligation are the changes in the present value of the defined benefit obligation resulting from (1) experience adjustments and (2) the effects of the changes in actuarial assumptions. Remeasurements of the defined benefit obligation are recognized in OCI and are never reclassified to profit or loss.
the plan assets at December 31 for Jory should be valued at
The fair value of Jory’s plan assets at December 31 can be calculated as follows: Fair value, January 1 $6,000,000 Add: Actual return 500,000 Add: Employer contribution 800,000 Less: Retirement benefits paid (300,000) Fair value, December 31 $7,000,000
