When should past service cost be recognized? According to PAS ---, paragraph ---, an entity must --- past --- cost as an --- at the --- of the following dates: 1. When the plan --- or --- ----. 2. When the entity --- related --- costs or --- benefits. This means --- --- --- costs, whether --- or ---, must be --- as an --- immediately, and an entity cannot --- recognition of --- past service costs over the remaining --- vesting period.

According to PAS 19R, paragraph 103, an entity must recognize past service cost as an expense at the earlier of the following dates: 1. When the plan amendment or curtailment occurs. 2. When the entity recognizes related restructuring costs or termination benefits. This means all past service costs, whether vested or unvested, must be recognized as an expense immediately, and an entity cannot defer recognition of unvested past service costs over the remaining future vesting period.

FAR2C18 D Flashcards by Leo III

State all content information.
What is a plan curtailment?
5
6
4

Part 1 Only

1) What is a plan curtailment?
2) When should past service cost be recognized?
3) What are vested benefits?
4) What are plan assets?
5) What are the conditions for assets held by a long-term benefit fund?

How well did you know this?

Not at all

Perfectly

State all content information.
What is a plan curtailment?
5
6
4

Part 1 Only

1) What is a — —-?
2) When should — — cost be —?
3) What are — —?
4) What are — —?
5) What are the — for — held by a long-term — fund?

How well did you know this?

Not at all

Perfectly

State all content information.
What is a plan curtailment?
5
6
4

Part 2 Only

1) What is a qualifying insurance policy?
2) What happens if an insurance policy is not a qualifying insurance policy?
3) How are plan assets measured?
4) What is excluded from plan assets?
5) How are plan assets adjusted?
6) What are the components of return on plan assets?

How well did you know this?

Not at all

Perfectly

State all content information.
What is a plan curtailment?
5
6
4

Part 2 Only

1) What is a — —- —?
2) What happens if an — policy is not a — — policy?
3) How are — — —?
4) What is — from — —?
5) How are — — —-?
6) What are the — of — on — assets?

How well did you know this?

Not at all

Perfectly

State all content information.
What is a plan curtailment?
5
6
4

Part 3 Only

1) What deductions are made when computing the return on plan assets?
2) How is the return on plan assets recognized?
3) What is the Accumulated Benefit Obligation (ABO)?
4) What is the Projected Benefit Obligation (PBO)?

How well did you know this?

Not at all

Perfectly

State all content information.
What is a plan curtailment?
5
6
4

Part 3 Only

1) What — are made when computing the — on — assets?
2) How is the — on — assets —?
3) What is the — — Obligation (—)?
4) What is the — — Obligation (—)?

How well did you know this?

Not at all

Perfectly

State all content information.
What is a plan curtailment?
5
6
4

How well did you know this?

Not at all

Perfectly

What is a plan curtailment?

It refers to a significant reduction by the entity in the number of employees covered by the defined benefit plan. This can arise from events such as:

Closing of a plant
Discontinuance of an operation
Termination or suspension of the plan

How well did you know this?

Not at all

Perfectly

What is a plan curtailment?

It refers to a significant — by the entity in the number of — — by the defined benefit plan. This can arise from — such as:

— of a —
— of an —
— or — of the —

It refers to a significant reduction by the entity in the number of employees covered by the defined benefit plan. This can arise from events such as:

Closing of a plant
Discontinuance of an operation
Termination or suspension of the plan

How well did you know this?

Not at all

Perfectly

It refers to a significant reduction by the entity in the number of employees covered by the defined benefit plan. This can arise from events such as:

Closing of a plant
Discontinuance of an operation
Termination or suspension of the plan

Plan curtailment

How well did you know this?

Not at all

Perfectly

When should past service cost be recognized?

According to PAS 19R, paragraph 103, an entity must recognize past service cost as an expense at the earlier of the following dates:

When the plan amendment or curtailment occurs.
When the entity recognizes related restructuring costs or termination benefits.

This means all past service costs, whether vested or unvested, must be recognized as an expense immediately, and an entity cannot defer recognition of unvested past service costs over the remaining future vesting period.

How well did you know this?

Not at all

Perfectly

When should past service cost be recognized?

According to PAS —, paragraph —, an entity must — past — cost as an — at the — of the following dates:

When the plan — or — —-.
When the entity — related — costs or — benefits.

This means — — — costs, whether — or —, must be — as an — immediately, and an entity cannot — recognition of — past service costs over the remaining — vesting period.

According to PAS 19R, paragraph 103, an entity must recognize past service cost as an expense at the earlier of the following dates:

When the plan amendment or curtailment occurs.
When the entity recognizes related restructuring costs or termination benefits.

How well did you know this?

Not at all

Perfectly

What are vested benefits?

Vested benefits are employee benefits that are not conditional on future employment, meaning employees have a right to these benefits even if they leave the organization.

How well did you know this?

Not at all

Perfectly

Vested benefits are employee benefits that are not conditional on future employment, meaning employees have a right to these benefits even if they leave the organization.

Vested benefits

How well did you know this?

Not at all

Perfectly

What are plan assets?

They refer to the assets held by a long-term benefit fund and qualifying insurance policies that are designated for paying employee benefits.

How well did you know this?

Not at all

Perfectly

They refer to the assets held by a long-term benefit fund and qualifying insurance policies that are designated for paying employee benefits.

Plan assets

What are the conditions for assets held by a long-term benefit fund?

The conditions for these assets are as follows:

Legal Separation: The assets must be held by an entity (the fund) that is legally separate from the reporting entity.
Availability for Employee Benefits: The assets must be available solely for the purpose of paying employee benefits.
Protection from Creditors: The assets are not accessible to the reporting entity’s creditors, even in the event of bankruptcy.
Conditions for Return:
o The assets cannot be returned to the reporting entity.
o They may be returned only if the remaining assets of the fund are sufficient to meet all employee benefit obligations, or if they are returned to reimburse the reporting entity for employee benefits that have already been paid.

What are the conditions for assets held by a long-term benefit fund?

The conditions for these assets are as follows:

— —: The assets must be — by an — (the fund) that is legally — from the reporting entity.
— for — —: The assets must be — solely for the — of — employee benefits.
— from —: The assets are not — to the reporting entity’s —, even in the event of —.
— for —:
o The assets — be — to the — entity.
o They may be — only if the remaining assets of the fund are — to meet all employee benefit —, or if they are returned to — the reporting entity for employee — that have already been —.

The conditions for these assets are as follows:

Legal Separation: The assets must be held by an entity (the fund) that is legally separate from the reporting entity.
Availability for Employee Benefits: The assets must be available solely for the purpose of paying employee benefits.
Protection from Creditors: The assets are not accessible to the reporting entity’s creditors, even in the event of bankruptcy.
Conditions for Return:
o The assets cannot be returned to the reporting entity.
o They may be returned only if the remaining assets of the fund are sufficient to meet all employee benefit obligations, or if they are returned to reimburse the reporting entity for employee benefits that have already been paid.

What is a qualifying insurance policy?

It is an insurance policy issued by an insurer that is not a related party of the reporting entity. The key characteristics are:
1. Use of Proceeds: The proceeds can only be used to pay employee benefits and are not available to the reporting entity’s creditors, even in bankruptcy.
2. Payment Restrictions: The proceeds cannot be paid to the reporting entity, except in the following cases:
o When the proceeds represent surplus assets that are not needed for the policy to pay employee benefits.
o When the proceeds are returned to reimburse the reporting entity for employee benefits already paid.

What is a qualifying insurance policy?

It is an — policy issued by an — that is not a —- party of the reporting entity. The key characteristics are:
1. — of —: The proceeds can only be used to — employee benefits and are not — to the reporting entity’s —, even in —.
2. — —: The — cannot be — to the — entity, except in the following cases:
o When the proceeds represent — assets that are not — for the policy to — employee benefits.
o When the proceeds are — to — the reporting entity for — benefits already paid.

It is an insurance policy issued by an insurer that is not a related party of the reporting entity.

Qualifying insurance policy

What happens if an insurance policy is not a qualifying insurance policy?

If an insurance policy held by the entity is not a qualifying insurance policy, it is not considered a plan asset.

How are plan assets measured?

Plan assets are measured at fair value. The definition of fair value is as follows:

Fair Value: The amount for which an asset could be exchanged or a liability settled between knowledgeable and willing parties in an arm’s length transaction.

What is excluded from plan assets?

Plan assets exclude:
1. Unpaid Contributions: Unpaid contributions due from the reporting entity to the fund.
2. Nontransferable Financial Instruments: Any nontransferable financial instruments issued by the entity and held by the fund.

How are plan assets adjusted?

Plan assets are reduced by any liabilities of the fund that do not relate to employee benefits. Examples include: * Trade and other payables. * Liabilities resulting from derivative financial instruments.

How are plan assets adjusted? Plan assets are --- by any --- of the fund that do not --- to employee benefits. Examples include: * --- and --- ---. * --- resulting from --- financial ---.

What are the components of return on plan assets?

The return on plan assets comprises the following components: 1. Income Derived from Plan Assets: o Interest, dividend, and other income. 2. Gains and Losses: o Realized and unrealized gains and losses on the plan assets.

What are the components of return on plan assets? The return on plan assets comprises the following components: 1. --- Derived from --- ---: o ---, ---, and --- income. 2. --- and ---: o --- and --- gains and --- on the plan assets.

What deductions are made when computing the return on plan assets?

When calculating the return on plan assets, the following costs should be deducted: 1. Management Costs: o Any costs associated with managing the plan assets or investments. 2. Taxes: o Any tax payable by the plan itself or any tax on investment income.

What deductions are made when computing the return on plan assets? When calculating the return on plan assets, the following costs should be deducted: 1. --- ---: o --- costs associated with --- the plan assets or ---. 2. ---: o Any --- payable by the plan itself or any --- on --- income.

How is the return on plan assets recognized?

The return on plan assets is fully recognized as a remeasurement and is accounted for as a component of other comprehensive income. * Definition of Remeasurement: Remeasurement is an accounting term introduced in PAS 19R, defined as the difference between the actual return on plan assets and the interest income on the fair value of the plan assets at the beginning of the reporting period. Treatment of Remeasurement: * Inclusion in Other Comprehensive Income: The amount of remeasurement is included in other comprehensive income and is not recycled or reclassified to profit or loss subsequently. * Potential Reclassification: The remeasurement may be reclassified subsequently through equity or retained earnings.

How is the return on plan assets recognized? The return on plan assets is --- recognized as a remeasurement and is accounted for as a --- of --- comprehensive income. * --- of ---: --- is an --- term introduced in PAS ---, defined as the --- between the --- return on plan assets and the --- income on the fair value of the plan assets at the beginning of the reporting period. Treatment of Remeasurement: * --- in Other --- ---: The amount of remeasurement is --- in other comprehensive income and is not --- or --- to profit or loss subsequently. * --- ---: The remeasurement may be reclassified --- through --- or --- earnings.

What is the Accumulated Benefit Obligation (ABO)?

* It is the actuarial present value of all benefits attributed by the pension benefit formula to employee service rendered before a specified date, based on current compensation levels.

Accumulated Benefit Obligation (ABO)

What is the Projected Benefit Obligation (PBO)?

* It is the actuarial present value of all benefits attributed by the pension benefit formula to employee service rendered before a specified date, based on future compensation levels. This includes projections of future salary increases that the entity expects to pay employees during the remainder of their employment.

What is the Projected Benefit Obligation (PBO)? * It is the --- present value of all benefits attributed by the --- benefit formula to employee service rendered before a --- date, based on -- --- ---. This includes --- of future salary increases that the entity expects to --- employees during the --- of their employment.

It is the actuarial present value of all benefits attributed by the pension benefit formula to employee service rendered before a specified date, based on future compensation levels. This includes projections of future salary increases that the entity expects to pay employees during the remainder of their employment.

Projected Benefit Obligation (PBO)