M13 Pensions

Defined Benefit Plan Defined Contribution Plan Vested Benefit Obligation Accumulated Benefit Obligation Projected Benefit Obligation Prior Service Cost Methods/ Terminating the Assignment of PSC (1) Expected Years of Service Method (2) Straight-line Basis over Avg. Remaining Service Period

Corridor Approach used to find Excess Amortization of Deferred Gain. - Take 10% of the greater of the F.V. of Plan Assets or PBO If greater subtract that from the 10%() Interest Cost Settlement Rate Beg. PBO Pension Benefit Obligation Contribution Benefits Paid Excess Pension Liability Prepaid Pension Asset Adjustment on Accumulated Other Comprehensive income Pension Cost of Period Fair Value of Plan Assets

Pension Expense/Cost
+ Service Cost + Prior Service Cost Amortization + Interest Cost - Actual Return on Plan Assets +/- Deferred Gain/Loss - Excess Amortization of Deferred G/L - Amortization of Existing Net Obligation/NA@I Net Pension Expense Gains are Subtracted Losses are Added ASPIDER Service Cost What the Actuary told you to set aside Interest Cost Increase in the PBO due to the passage of time. Interest Earnings on the PBO Interest Cost = Beg. PBO X Disc/Settlement Rate Actual Return Amount we wanted, minus because its money we dont have to set aside Deferred Gain/ Unrecognized Pension Gain Difference b/w Actual Return & Expected Return. Deferred G/L = Actual Return Expected Return T-account Plan Assets Beg. PA + Contributions <Benefits Paid> **Actual Return** Ending Plan Assets Expected Return Expected Beg. PA x Expected Rate of Return Pension Expense 5 factors (1) Service Cost (2) Interest on Projected Benefit Obligation (3) Expected Return on Plan Assets (4) Amortization of Unrecognized Prior Service Cost or Credit (5) Effects of Gains and Losses Prior Service Cost Amortization of Prior Service Cost Prior Service Cost/Service Life Amortization of Existing Net Obligation or Net Asset at Implementation ** @ end of year compare the End PBO and FV PA = Target Liability/Asset

Change in the Projected Benefit Obligation

Beg. year PBO + Service Cost + Interest Cost + Prior Service Cost or Credit +/- Actuarial Gain or Loss - Benefits Paid End of Year PBO

Prior Service Cost or Credit From changes to plan in current year in full

Pension Worksheet
Beginning Balance + Prior Service Cost +Prior Service Cost Amortization + Interest Cost - Actual Return on Plan Assets Amortization of Unrecognized Loss Contribution Def. Tax Adjustment Ending Balance +/-Asset Gain Deferred Journ. Ent [PBO - F.V. PA] Other Comp. Income Pension Liability Unrecognized Prior Service Cost Unrecognized Net Gain or Loss Pension Liability = Unfunded Projected Obligation Adjustment to F/S Debit/Credit to Pension Asset/Liability MEMO Accounts ONLY Dont Make F/S Get Zeroed Out Plan Assets Projected Benefit Obligation

Reconciliation Schedule to Defined Pension Plans

- Benefits Paid - Actual Return on Plan Assets - Contributions by Employer

- Contributions by Plan Participants - Settlements & Divestitures

- Minor Differences, Terminology, Calculations Projected Benefit Obligation - PBO to Calculate PBO

Post Retirement Benefits Other than Pensions

Net Periodic Post Retirement Benefit

GAAP Benefit Years of Service Method - Projected Benefit Obligation IFRS Projected Unit Credit Method - Present Value of the Defined Benefit Obligation

** Input Pension Cost Step (1) Journal Entry Prepaid Pension Cost Pension Expense/Cost Cost Accrued Cost

GAAP Accumulated Benefit Obligation IFRS Accrued Benefit Obligation Pension Cost 50 40 10 IFRS Current Service Cost, Effects of Curtailments/Settlements GAAP Discount Rate = Settlement Rate IFRS Discount Rate = Market Yield of High Quality Corporate Bond @ End Yr IFRS Elect all Actuarial G/L Immediately or Deferred IFRS Can only Net Pension Plan Assets/Liabilities if have legally enforceable right to use other companys assets to settle another GAAP Net Assets and Net Liabilities

T-account Accrued Pension Cost Beg. = 20 (given) Liability = 10 (J.Entry) Excess Adj. = 50 (FIND THIS) Target Liability = 80 (Diff End PBO.FV PA) @ End of Year Compare End PBO > < F.V. Plan Assets Thought Owe 200 > 180 Set Aside = 80 Target Liability in Accrued Pension Cost * Increase Accrued Pension Cost 50, Debit Excess (OCI) Excess Adjustment of PBO over FV Increase Liability, Decrease Equity Excess Adjustment(OCI) Accrued Pension Cost 50 50

Postretirement Health-care Benefits

Per Capita Claims Accumulated other comprehensive income will consist of prior service costs, unamortized gains/losses from changes in actuarial assumptions and differences in the expected versus actual returns on plan assets, and the existing net obnligation or net asset at implementation. AS they are amortized they are removed from other comprehensive income but will not impact the funded status. Service Cost Discounted Present Value of the amount added to planned future retirement pay for this ears work

* Excess Adjustment should be Net of Tax Excess Adjustment(OCI) Deferred Tax Asset Accrued Pension Cost
Deferred Tax Liability

105 45 150

Funded Status of Plan is difference between Ending PBO and Ending Plan Assets. Overfund cannot be netted with Under fund. *Either have a Prepaid or Accrued Pension Cost *Accrued Cost is a Liability either Current or Non Current *Prepaid Pension Cost is always Current Journal Entry to Record Pension Expense OCI (G/L) Pension Expense Cash Pension/Liability OCI (PSC) Debit the Pension Expense after Determining the Change in the PBO Either a Prepaid Pension Cost or Accrued Pension Cost Disclosures Both Overfunded and Underfunded Plans Assets/Liabilities Show Funded Status of Plan

Wiley MCQs
1.2.3.4.5.6.7.11.14.15.19.20

IFRS