Pensions+Class+1+completed

Pensions+Class+1+completed - Chapter 19

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    Chapter 19 Chapter 19                       Pensions and Other Employee Future Benefits Pensions and Other Employee Future Benefits
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2 Pensions and Other Employee  Pensions and Other Employee  Future Benefits Future Benefits Introduction Introduction and Benefit and Benefit Plan Basics Plan Basics •Introduction •Defined contribution plans •Defined benefit plans •Nature of pension plans Presentation, Presentation, Disclosure, and Disclosure, and Analysis Analysis •Presentation •Disclosures Illustration •Analysis Defined Benefit Defined Benefit Pension Plans Pension Plans The employer’s obligation •Plan assets •Funded status Benefit cost components •Immediate recognition approach •Deferral and amortization approach •Other considerations Comparison of results •Other defined benefit plans IFRS / Private IFRS / Private Enterprise Enterprise GAAP GAAP Comparison Comparison Comparison of IFRS and private enterprise GAAP •Looking ahead
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3 Benefit Plans Benefit Plans Three examples of benefit plans: 1. Pension and other post-retirement plans (e.g. health care and life insurance) 2. Post-employment benefit plans (e.g. severance benefits and long-term disability benefits) 3. Compensated absences (e.g. parental leaves, unrestricted sabbatical leaves)
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4 Benefit Plans Benefit Plans Employee future-benefit plans can be: 1. Defined contribution (DC) plans Specifies the contributions or payments into the plan Does not specify the benefits the employees will receive or method used to determine benefits 1. Defined benefit (DB) plans These are any benefit plans that are not a defined contribution plan Further subdivided as: a. Benefits that vest or accumulate b. Benefits that do not vest or accumulate
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5 Employer contributes a defined sum (either a fixed sum or related to salary) to a third party Ownership of plan assets assumed by plan trustee Trustee is responsible for investment and distribution of plan assets Employee assumes the economic risk No guarantee made by employer as to benefits paid Cost of the plan in the current year is known with certainty Defined Contribution Plans Defined Contribution Plans
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6 Defined Contribution Plans Defined Contribution Plans Liability reported if contribution (funding) is less than required Asset reported if the amount contributed is more than required for the period When plan is first established or when there is an amendment to the plan, the employer may be obligated to make contributions for previous employee services (called prior or past service cost)
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7 Defined Contribution Plans: Defined Contribution Plans: Employers’ Journal Entries Employers’ Journal Entries Contribution made Contribution made is less than is less than the pension expense the pension expense Pension Expense Dr Pension Expense Dr Cash Cr Cash Cr Accrued Pension Accrued Pension Liability
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This note was uploaded on 12/16/2011 for the course ACTG 3P33 taught by Professor N-a during the Fall '08 term at Brock University, Canada.

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Pensions+Class+1+completed - Chapter 19

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