F7 Flashcards
Defined Contribution Plan
Specifies the periodic amount of contribution’s to an employees plan, calculated by employees length of service and compensation amounts
Defined Benefit Plan
Defines benefits to be paid to employees at retirement.
Net Period Pension Cost Calculation
Current Service Cost \+ Interest Cost - Return on Plan Assets \+ Amortization of Prior Service Cost - Gains \+ Losses \+ Amortization of Actuarial Loss (Gain)
Corridor Approach: calculating amortization of unrecognized gain or loss
Beginning Unrecognized gain or loss - 10% of Beg. PBO or Beg. FV plan assets = Excess gain/loss / Average remaining service life = Amortization of gain or loss
FV of plan assets calculation
Beginning FV of plan asset \+ Contributions \+ Actual return on plan assets - Benefits paid to retirees = Ending FV of plan asset
Amortization of Existing Net Obligation or Net Asset
Projected Benefit Obligation - FV of plan assets = Initial unfunded obligation / 15 or Average employee job life if greater = Amortization
Postretirement benefits must be accrued if these conditions are met
Obligation is attributable to services already rendered.
Employees’ rights either accumulate or vest.
Payment is probable.
Amount of benefits can be reasonably estimated.
Defined Benefit Pension Plan required financial statements
Statement of Net Assets Available for Benefits (Balance Sheet)
Statement of Changes in Net Assets Available for Benefits (Income Statement)
Statement of Accumulated Plan Benefits (Liabilities)
Statement of Changes in Accumulated Plan Benefits
Defined Contribution Pension Plan required financial statements
Statement of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits
FV of Projected Benefit Obligation calculation
Beg. PBO \+ Service and Interest Cost \+ Prior service cost from current period plan amendments \+ Actuarial Losses/ - Actuarial Gains - Benefits paid to retirees = End. PBO
Examples of Additional Paid-in Capital
Sale of treasury stock at a gain
Liquidating dividends
Conversion of bonds
Small stock dividends
Dividend definition
A pro rata distribution by a corporation based on the shares of a particular class of stock
Property dividends accounting
Gain or loss between FV and book value recorded in income.
Decrease retained earnings by the FV
Scrip dividends
A form of notes payable where a corporation commits to paying a dividend on later date.
On declaration date, debit retained earnings and credit notes payable.
Liquidating dividends
Occur when dividends to shareholders exceed retained earnings.
Decrease additional paid in capital, then common stock, by dividend amount less retained earnings.
Does NOT affect retained earnings.
