2007_Financial_6_SFAS_158_Update6

2007_Financial_6_SFAS_158_Update6 - "The online update...

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1 "The online update list contains two (2) documents for the F6 class. Each contains information that will assist you in your understanding of the material necessary to assist you in passing the CPA exam. Please ensure that you download and review ALL updates." In September 2006, the Financial Accounting Standards Board issued Statement Number 158, "Employers’ Accounting for Defined Benefit Pension and Other Posretirement Plans . " According to the AICPA, new pronouncements qualify to be tested on the exam beginning six (6) months after issuance. Historically, between the time of issuance and the time the material is testable, the CPA exam has typically avoided the transition topics on the exam. As this material was unavailable as of the date of the printing of our 2007 Edition Becker CPA Review Financial texts, the new provisions have not been incorporated to the material you currently have. We have been advised by the AICPA that the provisions of SFAS No. 158 will be first tested in the second testing window of 2007 (i.e., beginning no earlier than April 1, 2007). In an effort to provide our students with the most up-to-date information possible, Becker CPA Review has identified additional updates that are required for the recently issued SFAS No. 158. The updates are included in the information in this document. Again, this information will apply to students who are using our program to prepare currently for an examination scheduled for the second testing window of 2007 and later. We hope that you will find this update clear and organized.
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2 SUMMARY of SFAS No. 158 – Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans SFAS No. 158 represents a fundamental shift in the balance sheet reporting for defined benefit pension plans and postretirement benefit plans. Both SFAS No. 87 – Employers’ Accounting for Pensions and SFAS No. 106 - Employers ’ Accounting for Postretirement Benefits Other than Pensions allowed for delayed recognition of certain components of pension and postretirement plans. This delayed recognition generally resulted in a significant difference between the pension plan asset or liability reported on the balance sheet and the funded status of the pension plan, making it difficult for financial statement users to assess a company’s ability to meet its pension obligations. In order to improve the transparency of the balance sheet reporting for defined benefit pension plans and postretirement plans (hereafter referred to collectively as “pension plan(s)”), SFAS No. 158 requires that businesses with one or more single-employer defined benefit pension plan(s): 1. Report the funded status of all pension plans on the statement of financial position (i.e., the balance sheet). A plan’s funded status is the difference between the fair value of the plan’s assets and (a) the projected benefit obligation (PBO) for defined benefit pension plans or (b) the accumulated postretirement benefit obligation (APBO) for other postretirement benefit plans.
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2007_Financial_6_SFAS_158_Update6 - "The online update...

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