F6 - Pension Plans Flashcards
Under U.S. GAAP, the service cost component of net periodic pension cost is measured using the:
Projected Benefit Obligation (PBO)
Under U.S. GAAP, what is 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?
Accumulated Benefit Obligation (ABO); this calculation is not usually used
Pensions are GREAT at the BEGINNING
Pensions are GREAT at the BEGINNING
What are the components of net periodic pension cost?
SIR AGE:
Service cost (given)
Interest cost (Beg PBO x discount rate)
Return (expected) on plan assets (Beg FV x expected rate)
Amortization of prior service cost (Beg PSC / average life)
Gains and losses amortization
Excess amortization of transition asset/liability
T/F: If FV of plan assets is less than the benefits payable for the next year, the difference is classified as a current liability
True; ex: $200,000 FV of plan assets and $245,000 benefits payable for the next year equals $45,000 in current liability
T/F: Under IFRS plan amendments are put into OCI and amortized over the average remaining life
False; they are charged against the income statement in the year of the amendment
How is interest cost calculated for pensions?
Discount rate x PBO