8/2/16 Flashcards
Under U.S. GAAP, how is amortization for unrecognized prior service cost calculated per year?
By assigning an equal amount of the cost to the future periods of service of each employee at the date of amendment to the plan.
The service cost component of a net periodic pension cost is measured using the:
Expected return on plan assets. Service cost represents the increase in the projected benefit obligation resulting from employees’ services rendered during the year.
What are 3 required disclosures in the financial statements for pensions?
- Components of period pension cost “SIRAGE” is a required disclosure.
- The amount of unrecognized prior service cost.
- A detailed description of the plan including employee groups covered.
What are the components of U.S. GAAP net pension expense?
- current Service cost
- Interest cost
- (Return on plan assets)
- Amortization of prior service cost
- (Gains) losses
- amortization of Existing net obligation or (net asset)
Define Accumulated Benefit Obligation
The present value of all future retirement payments attributed by the pension benefit formula to employee services rendered prior to that date and based on past and current compensation levels only.
Define Service Cost
The present value of all pension benefits earned by company employees in the current year.
Define Projected Benefit Obligation
The present value of future retirement payments attributed to the pension benefit formula to employee services rendered prior to a date, based on current, and past and (assumption about) future compensation levels. Used for most pension calculations.
How are pension plans reported on the balance sheet?
U.S. GAAP requires that all overfunded (FV plan assets > PBO) pension plans be reported as a noncurrent asset, and that all underfunded (FV plan assets
Under IFRS, what amount is reported in accumulated other comprehensive income related to pension plan expenses?
Remeasurements of the defined benefit liability (asset), including remeasurements from actuarial gains, are reported in other comprehensive income and are not reclassified (amortized) to the income statement.
Accumulated other comprehensive income is not increased or decreased by the full increase in the fair value of plan assets during the period.
T or F?
True.
Define Interest Cost
The increase in the projected benefit obligation during the current period that is due to the passage of time.
Under IFRS, how is past service cost recognized?
On the income statement in the period of the plan amendment.
The accumulated benefit obligation is used to compute the funded status of the pension plan.
T or F?
False. The ABO is not used to compute the funded status of the pension plan.
How should plan investments be reported in a defined benefit plan’s & employee benefit pension plans and trusts’ financial statements?
At fair value.
What does the statement of changes in net assets available show?
Appreciation in the FV of investments, any other investment income, investment expenses, contributions, benefits paid, and administrative expenses to arrive at the net increase or decrease in net assets available for benefits during the period.
