FAS 106 Appendix C Illustrations

Question 1

Retiree full eligibility date

Answer 1

1. The date an EE has rendered all service necessary to earn all of the benefits expected to be received by that EE
2. Plan that provide incremental benefits for additional years of service
3. Pay related plans
4. Spousal coverage
5. Single plan provides health and life insurance benefits with differing eligibility
6. Plans that provide benefits based on status at date of termination
7. Post retirement benefits to be received by disabled plan participant

Question 2

EPBO and APBO

Answer 2

1. Expected post retirement benefit obligation (EPBO) and Accumulated post retirement benefit obligation (APBO)
   1.1 when EE has worked 20 out of 25 years required based on fully eligibility rate,
   APBO = 20/25 * EPBO

Question 3

Delayed recognition and reconciliation of funded status

Answer 3

1. Unrecognized obligation at date of transition - the difference between APBO and fair value of plan asset at the date of transition, plus any accrued benefit cost
2. Plan amendment that increases benefits - reflected immediately in APBO, but delayed in financial statements
3. Negative plan amendment - reflected immediately in APBO by first reducing unrecognized prior service cost and any unrecognized transition obligation;
   The remainder is recognized in the financial statements on a delayed basis
4. Changes in assumption - reflected immediately in APBO; recognized in financial statement either immediately or delayed

Question 4

Plan amendments and prior service cost

Answer 4

1. Equal amount assigned to each future year of service to full eligibility date
   
   1. 1 amortize prior service cost using remaining years of service prior to the full eligibility date of each participant active at the date of the amendment but not yet fully eligible for benefits
   2. 2 portion of prior service cost recognized in each future year is weighted based on number of those plan participants expected to render service in each of those future years
2. An alternative amortization method that more rapidly reduces the unrecognized service cost is permitted

Question 5

Gain and losses and timing of measurements

Answer 5

1. Gains and losses result from experience different from assumed or changes in assumptions
2. Loss on APBO
   
   2. 1 loss means actual APBO is greater than projected
   3. 2 financial statement shows actual APBO, but an unrecognized loss is established and amortized if > corridor
   4. 3 corridor = 10% of greater of beginning APBO or plan assets
3. Gain on assets
   
   3. 1 gain means that at end of year, plan assets greater than projected
   4. 2 financial statement shows actual assets, but an unrecognized gain is established and amortized