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Student Notes, Pensions(17)

All underfunded plans should be combined and shown as

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pension asset on the balance sheet.  All underfunded plans should be combined and shown as  a pension liability on the balance sheet. The FASB rejected the alternative of combining all plans and representing  the net amount as a single net asset or net liability. Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements
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Chapter 20-37 Within the Financial Statements Actuarial Gains and Losses/Prior Service Costs Actuarial  gains and losses  not recognized as part of pension  expense are recognized as increases and decreases in other comprehensive  income.  The same type of accounting is also used for  prior service cost . Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements
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Chapter 20-38 Actuarial Gains and Losses/Prior Service Costs To illustrate the presentation of other comprehensive income and related  accumulated OCI, assume that Obey Company provides the following  information for the year 2009. None of the Accumulated OCI on January 1,  2009, should be amortized in 2009. Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements
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Chapter 20-39 For Obey Company, the computation of “Other comprehensive loss” for 2009 is as  follows. Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements
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Chapter 20-40 The components of other comprehensive income must be reported in one of three ways: (1) in a second income statement, (2) in a combined statement of comprehensive  income, or (3) as a part of the statement of stockholders’ equity. Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements
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Chapter 20-41 To illustrate the second income statement approach, assume that Obey has reported a  traditional income statement. Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements Reporting Pension Plans in Financial Reporting Pension Plans in Financial Statements Statements
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Chapter 20-42 Within the Notes to the Financial Statements 1. Major components of pension expense. 2. Reconciliation showing how the projected benefit obligation and the  fair value of the plan assets changed.  3.
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