Pensions Flashcards
Where are gains/losses recognized for PBO?
Gain/Loss go to OCI (net of tax)
Defined benefit pension plan
A pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service, or compensation
Defined Contribution Plan
A plan that provides an individual account for each participant and provides benefits that are based on amounts contributed.
Projected Benefit Obligation (PBO)
Reflects future compensation levels
The actuarial present value as of a date for all benefits attributed by the pension benefit formula to employee service rendered before that date.
Accumulated Benefit Obligation
PV of Pension Benefits Accrued based on present compensation levels and service
Where should the overfunded and underfunded pension plans be reported?
Balance Sheet
Overfunded = noncurrent asset Underfunded = noncurrent liability
If multiple plans, they are aggregated and disclosed, but NOT netted (overfunded plans may not be netted with underfunded plans)
Calculate the funded status of a pension plan.
FV of Plan Assets - PBO
What is disclosed in the notes for pension plans?
Pension Fund Policies Types of assets held 5yr Benefits to be paid 5yr Benefits in aggregate to be paid Est. Pension Contributions for next period
Calculate Pension Expense
\+/- Prior Service Cost Amortization - Return on Plan Assets \+Interest on PBO \+ unexpected Loss or (-) Gains \+ Service Cost
Calculate Return on Plan Assets
(Ending Balance of plan assets at FV - Beginning balance of plan assets at FV) + benefits -contributions
Prior Service Cost
cost of retroactive benefits granted in a plan amendment and are amortized. The unamortized portion is located in OCI.
Calculate Project Benefit Obligation (PBO)
Beg. of year PBO \+ Service Cost \+ Interest Cost \+/- Prior service cost or credit \+/- Gain or Loss - Benefits paid = End of year PBO
Calculate pension liability
FV of plan assets - PBO
