Chapter 6 pension plans

Question 1

How is amortization of unrecognized prior service cost calculated?

Answer 1

You assigne an equal amount of cost to the future periods of service of each employee at the date of amendment to the plan. Find the average service life of the employees and spread equally.

Question 2

Under GAAP how is defined benefit plan service costs measured?

Answer 2

Using the projected benefit obligation

Question 3

What is accumulated benefit obligation?

Answer 3

It is the present value of future payments based on the pension formula to employee services rendered prior to a date, based on current and past compensation levels.

Question 4

How do you calculate net periodic pension cost for an income statement?

Answer 4

Service cost + interest cost - Expected return on plan assets + amortization of prior service costs + amortization /losses - amortization of transition asset = net periodic pension costs
(SIRAGE)

Question 5

Under IFRS, when there is amendment to difined benefit plan affecting prior service, when is it recognized?

Answer 5

Under IFRS past service cost is recognized on the income statement in the period of the plan amendment.

Question 6

How are pension plan investments reported?

Answer 6

At fair value

Question 7

Where should a company reported status of a defined benfit pension plan?

Answer 7

On the balance sheet (statement of financial position)