Employee Benefits Flashcards
What are defined Contribution Pension plans
employer contributions to the plan are fixed and employees access the risk
Under the contribution pension plans, what is the balance sheet pension account value
Accrued expenses - Contributions made
What are defined benefit plans
Benefits paid out are fixed and employer accepts the risk to ensure that the plan has sufficient resources to pay the future benefits
How to calculate Defined benefit plan obligation
DBO Beginning \+ Current service earned in the year \+ Past service awarded in the year \+ Interest on the DBO - Benefits Paid in the year = Expected ending DBO - Actual Ending DBO =Remeasurement gain/loss
How to Calculate the Defined benefit plan asset at year-end
Plan asset Beg \+ Funding payments made in the year \+ Interest income on the plan assets - Benefits paid in the year =Expected ending plant assets - Actual ending plan assets = Remeasurement gain/loss
What is the Defined benefit Obligation
PV of all future employee benefits estimated to be paid as per actuary
No on the B/S
What are defined plan assets
Assets are placed in separate legal entity when the benefit plan is funded
How to Calculate the interest cost
+ Current service earned in the year x # months since paid in the year/12
+ Past service awarded in the year
- Benefits Paid in the year x # months since paid in the year/12
= Weighted average DBO
X Discount Rate
= Interest Cost on DBO
How To Calculate interest income
Plan asset Beg
+ Funding payments made in the year x # months since paid in the year/12
- Benefits paid in the year x # months since paid in the year/12
= Weighted average plan assets
x Discount Rate on DBO
= Interest income on plan assets
How to Calculate net interest cost
Interest cost - Interest income
NeT Benefit liability in Balance sheet
BDO - BDO assets
