Deck 4

Question 1

how do you calculate interim tax expense

Answer 1

multiply year to date income by the effective tax rate and subtract from the income tax expense already recorded

Question 2

installment sales create differed tax assets or liab

Answer 2

DTL

Question 3

Dividend income exclusion for tax purpose break out

Answer 3

0-19% ownership … exclude 70%
20-80% ownership… exclude 80%
80-100% ownership exclude 100%

Question 4

JE to record gain on forward contract once due

Answer 4

Dr Cash Flow hedge
CR OCI

CR Cash
CR Cash Flow Hedge

Question 5

JE to record sale of comodity after the forward

Answer 5

DR Ar
CR Sale

DR OCI
CR Gain from hedge
*when sold reclassifies the gain on hedge from OCI to earnings

Question 6

How to calculate PBO

Answer 6

Think SIP AB(s… when u are retired)

Beginning PBO
+ Service Cost
+ Interest Costs
+ Prior service cost from current period plan amendments
+- Actuarial losses, incurred in current period
- Benefits Paid to retirees
= Ending PBO

Question 7

How do you calculate actual return on plan assets

Answer 7

Squeeze into it:

Beg FV of plan Assets 
\+ Contributions 
\+ Actual returns on PA
- Benefits Paid to retirees
= Ending FV of plan assets

Question 8

How do you calculate Net periodic pension cost (pension expense)

Answer 8

Think SIR AGE 
Current service cost 
\+interest Cost 
-Return on plan assets 
\+ Amortization of prior service cost 
 and losses
\+ Amortization of EXISTING net obligation or net asset
= Net Periodic Pension Cost

Question 9

How to calculate Interest Cost on a PBO

Answer 9

Beg PBO X Discount rate

Not Market or prime rate

Question 10

G/L for PBO using corridor approach

Answer 10

Unrecognized G/L (at beg of year) 
<10% of PBO or Mrkt related value (whatever is greater)>
= Excess 
/ by avg remaining service life 
= amort. of recognized G/L

Question 11

Amortization of Existing Net Obligation or Net Asset at implementation

Answer 11

PBO

= Initial unfunded obligation
/ by 15 years or AVG employee job life (greater fo 2)
= Minimum amort.

Question 12

What is reported in AOCI for pensions

Answer 12

Prior unrecognized service cost minus amortization of the prior unrecognized service cost

Question 13

If a company has multiple pension plans are they reported together or separate

Answer 13

separate

Question 14

Under IFFRS Gains and losses that are remeasurements of the net defined benefit liability are reported where

Answer 14

OCI