04-18-12 Class26 Ch 20 Pensions

Answer recordedinnetgainorlossaccount

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Unformatted text preview: result from: 1. Changes in the market value of plan assets, and 2. Changes in actuarial assumptions that affect the amount of the projected benefit obligation. Chapter 18-43 LO 7 Explain the accounting for unexpected gains and losses. Gains and Losses Gains and Losses Question: What is the potential negative impact on Net Income of these unexpected swings? Volatility The profession decided to reduce the volatility with smoothing techniques. Chapter 18-44 LO 7 Explain the accounting for unexpected gains and losses. Gains and Losses Gains and Losses Question: What happens to the difference between the expected return and the actual return? Answer Recorded in Net Gain or Loss account. Amortize amount in excess of corridor to pension expense, over the average remaining service period of active employees expected to receive benefits under the plan. Chapter 18-45 LO 7 Explain the accounting for unexpected gains and losses. Gains and Losses Gains and Losses Question: What happens with unexpected gains or losses from changes in the Projected Benefit Obligation (PBO)? Answer Recorded in Net Gain or Loss account. Amortize amount in excess of corridor to pension expense, over the average remaining service period of active employees expected to receive benefits under the plan. Chapter 18-46 LO 7 Explain the accounting for unexpected gains and losses. Gains and Losses Gains and Losses Corridor Amortization FASB invented the corridor approach for amortizing the accumulated net gain or loss balance when it gets too large. How large is too large? 10% of the larger of the beginning balances of the projected benefit obligation or the market­related value (which may equal fair value) of the plan assets. Any accumulated net gain or loss balance above the 10% must be amortized. Chapter 18-47 LO 8 Explain the corridor approach to amortizing gains and losses. Reporting Pension Plans in Financial Reporting Pension Plans in Financial Reporting Reporting Statements Statements Statements Statements Within the Financial Statements Pension expense Pension Asset / Liability Components of Accumulated Other Comprehensive Income Chapter 18-48 LO 9 Describe the requirements for reporting pension plans in financial statements. Reporting Pension Plans in Financial Reporting Pension Plans in...
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This note was uploaded on 04/02/2013 for the course ACCT 415 at USC.

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