04-18-12 Class26 Ch 20 Pensions

Chapter 18 32 lo 2 identify types of pension plans

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: on Plans Defined-Contribution Plan Employer contribution determined by plan (fixed) Risk borne by employees Benefits based on plan value Defined-Benefit Plan Benefit determined by plan Employer contribution varies (determined by Actuaries) Risk borne by employer Actuaries estimate the employer contribution by considering mortality rates, employee turnover, interest and earning rates, early retirement frequency, future salaries, etc. Chapter 18-32 LO 2 Identify types of pension plans and their characteristics. Accounting for Pensions Accounting for Pensions Two questions: (1) What is the pension obligation that a company should report in the financial statements? (2) What is the pension expense for the period? Chapter 18-33 LO 3 Explain alternative measures for valuing the pension obligation. Accounting for Pensions Accounting for Pensions The employer’s pension Alternative measures of the Liability obligation is the deferred Illustration 20-3 compensation obligation it has to its employees for their service under the terms of the pension plan. FASB’s FASB’s choice choice Chapter 18-34 LO 3 Explain alternative measures for valuing the pension obligation. Accounting for Pensions Accounting for Pensions Recognition of the Net Funded Status Companies must recognize on their balance sheet the full overfunded or underfunded status of their defined­benefit pension plan. The overfunded or underfunded status is measured as the difference between the fair value of the plan assets and the projected benefit obligation. Chapter 18-35 LO 3 Explain alternative measures for valuing the pension obligation. Accounting for Pensions Accounting for Pensions Accounting Accrual Concept Vested benefits at current salaries Non vested at current salaries Vested and non vested benefits at future comp Primary objective of the next slides are to highlight the complexity of the calculations associated with defining the expense to be recognized for defined benefit retirement programs Chapter 18-36 LO 3 Explain alternative measures for valuing the pension obligation. Accounting for Pensions Accounting for Pensions Components of Pension Expense 1. Service Costs 2. Interest on the Liability 3. Actual Return on Plan Asset...
View Full Document

This note was uploaded on 04/02/2013 for the course ACCT 415 at USC.

Ask a homework question - tutors are online