17.FASB Interpretation 3 was issued in response to the passage of ERISA. 18.ABP Opinion No. 8 was consistent with the revenue-expense approach. 19.SFAS No. 35 is considered a landmark standard because it set accounting and reporting standardsfor a new entity, the pension plan, as separate and distinct from the sponsoring company. 20.SFAS No. 87 was the first pension accounting standard to segregate accumulated benefits into vested and unvested benefits. Accounting Theory: 8 th edition Page 2 of 13
Chapter 16—PENSIONS AND OTHER POSTRETIREMENT BENEFITS 21.SFAS No. 87 is no longer in effect, having been replaced by SFAS 132. 22.SFAS No. 87 achieved greater uniformity in measuring accrued pension expense by mandating use of one actuarial method, the accumulated benefit method. 23.In calculating the service cost portion of pension expense, future salaries need not be estimated. 24.SFAS No. 87 presumes an explicit contract in calculating accrued pension expense. 25.The disclosure requirements of SFAS No. 132 pertain to both pensions and OPEBs where applicable. 26.Prior research studies have provided evidence that a firm's unfunded pension benefits are interpreted as if they are liabilities. 27.With an accumulated benefit approach, the discount rate includes a general inflation factor. 28.Prior to SFAS No. 106, OPEB had been handled on a cash basis of accounting. 29. The main change brought about by SFAS No. 158 was to bring the overfunded or underfunded status of a defined benefit plan to the footnotes of the balance sheet. 30.Legal services and day care benefits are not included in OPEBs. 31. The FASB took an enormous step in SFAS No. 106 by requiring the recognition and measurement of OPEB costs and obligations. Accounting Theory: 8 th edition Page 3 of 13
Chapter 16—PENSIONS AND OTHER POSTRETIREMENT BENEFITS 32.The core of SFAS No. 106 is the need to predict future health care costs. 33.The assumption that OPEBs are part of the total compensation package for covered employees clearly stamps them as being attributable to past transactions or events. 34.SFAS No. 106 requires a liability be recognized related to OPEB only if a legal obligation exists.
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