Lesson 14 Pension plans Flashcards
What should a company disclose about defined benefit pension plan ?
- Description of company’s funding Policies and types of assets held
- Amount of net periodic pension cost
For the period - Fair value of plan assets
How should an entity report a defined benefit pension plan?
To the extent to which the fund is underfunded or an asset to the extent to which it is overfunded.
How is funding determined for a defined pension plan?
By comparing the PBO to the fair value of plan assets And a liability is recognized when the PBO exceeds plan assets
Where should the funded status of a defined pension plan be reported?
In the statement of financial position or Balance sheet
What is the accumulate benefit obligation ?
Present value of all future retirement payments that the employee is already entitled to based on services rendered prior to that date.
A company providing post retirement benefits to EE will disclose?
The assumed trend in the rate is health care costs that was used to measure the expected cost of benefits covered by the plan
Accumulate post retirement obligation
What other disclosures should a company provide about their post retirement Benefits?
Brief description
The status of overfunded and underfunded post retirement plans
The effects an accumulated post benefit obligation
Service costs
Interest cost of 1% increase or decrease of the trends rate for health care costs.
Disclosures required for a company with a defined-benefit pension plan.
Period pension cost
Amount of unrecognized prior service cost
Detailed description of plan including employee groups covered
IFRS requires that PBO and service cost be determined using ?
Projected-unit-credit method
What is actual return on plan assets ?
Equal to the increase in plan assets after eliminating the effects of contributions to the plan and distributions from the plan.
Calculation:
Beginning fair value of plan assets + contributions- distribution
Compare to ending fair value of plan assets
This is the return
How should plan investments be reported in a defined benefit plan financial statements?
At fair value
Prior service cost is
Amortized over the average remaining service lives of the covered employees
Beg PsC/Avg service life
Cost associated with service yrs before plan was implemented
How is unrecognized prior service cost amortization ?
Current year service years/ total service years in the future * unrecognized prior service cost
Per capita claims are
Cost unique to post retirement health-care benefits
Service cost is?
Defined as the increase in the projected benefit obligation resulting from services performed by EE during the period
Calculated as the increase in the PBO after elimination of the effects of interests or distribution from the plan
