Chapter 20: Accounting for Pensions and Post-retirement Benefit (Using a…
Chapter 20: Accounting for Pensions and Post-retirement Benefit
Reporting Pension Plans in Financial Statement
Other Post-retirement Benefits
Within the notes to the financial statements
Within the financial statements
Using a Pension Worksheet
2017 entries and worksheet
2016 entries and worksheet
Past service cost
2015 entries and worksheet
Accounting for Pensions
Plan Assets and Actual Return
Changes in the Defined Benefit Obligation (Asset)
Net Defined Benefit Obligation (Asset)
Measures of the Pension Liability
Accounting rules require that, at each measurement date, a company must determine the appropriate discount rate used to measure the pension liability, based on current interest rates.
The profession adopted the defined benefit obligation—the present value (without deducting any plan assets) of the expected future payments required to settle the obligation resulting from employee service in current and prior periods.
Nature of Pension Plans
Role of Actuaries
Actuaries are individuals trained through a long and rigorous certification program to assign probabilities to future events and their financial effects.
companies engage actuaries to ensure that a pension plan is appropriate for the employee group covered
Defined Benefit Plan
A defined benefit plan outlines the benefits that employees will receive when they retire.
Defined Contribution Plan
defines only the employer’s contribution
. It makes
no promise regarding the ultimate benefits paid out
to the employees.
the employer agrees to contribute to a pension
trust a certain sum each period, based on a formula.