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Unformatted text preview: ct/ur w/lc5122001.tp0/cobaltM ainFr ame.dowebct 5/7 10/14/13 Blackboar d Lear ning System 3. If t he beginning balanc e of t he ac t uarial gain or loss is great er t han t he c orridor, t hen t he
exc ess amount (gain or loss––t he c orridor in St ep 1) is amort ized. T he amort izat ion period
is c ommonly over t he expec t ed average remaining servic e lif e (EARSL) of t he employee
group. Ot her met hods of amort izat ion c an be c hosen as long as t hey are applied in a
syst emat ic and c onsist ent manner.
F or assignment s and exam purposes, ac t uarial gains and losses in exc ess of t he c orridor are t o
be amort ized over t he EARSL, unless you are inst ruc t ed ot herwise.
T here are t wo it ems of import anc e wit h regards t o ac t uarial gains and losses:
Amort izat ion only t akes plac e on t he dif f erenc e in exc ess of t he c orridor t hat exist ed at
t he beginning of t he year.
Unrec ognized ac t uarial gains and losses is a c umulat ive number.
Disc losure of Pension Cost s in F inanc ial St at ement s
Pension plans disc losure requirement s inc lude t he f ollowing:
Amount s rec orded in t he f inanc ial st at ement s—pension expense (inc ome st at ement ) and
ac c rued pension asset /liabilit y (balanc e sheet ).
Amount s c ont ribut ed by bot h t he employer and employee. Det ails of t he memo side of
t he worksheet . T hese of f - balanc e sheet it ems inc lude t he ABO, t he f air value of plan
asset s, t he plan surplus or def ic it at t he balanc e sheet dat e, and t he benef it s paid
during t he period.
Ac t uarial assumpt ions wit h regard t o t he disc ount rat e used, t he expec t ed rat e of ret urn
on plan asset s, and t he f orec ast rat e of c ompensat ion inc reases.
Public c ompanies are also required t o disc lose t he f ollowing:
A breakout of t he makeup of pension expense f or t he period
A rec onc iliat ion showing how t he projec t ed benef it obligat ion and t he f air value of t he
plan asset s c hanged f rom t he beginning t o t he end of t he period
T he unamort ized balanc es of past servic e c ost s, net ac t uarial gains or losses, and net
t ransit ional obligat ion or asset and t he amount eac h of t hese c at egories amort ized
during t he period
Ac t ivit y 6- 2: Calc ulat ing Pension Expense
T he f ollowing exerc ises will reinf orc e your underst anding of c alc ulat ing pen...
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This note was uploaded on 02/05/2014 for the course BUS 370 taught by Professor Andreathomas during the Spring '13 term at Capital University.
- Spring '13