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ACCOUNTING
THEORY AND
ANALYSIS:
TEXT AND CASES
11TH EDITION
RICHARD G.
SCHROEDER
MYRTLE W. CLARK
JACK M. CATHEY
CHAPTER 14
PENSIONS AND
OTHER
POSTRETIREMENT
BENEFITS
Defined contribution
Defined benefit
Cost approach
Benefit approach
1
2
Historical
Perspective
47
ARB No.
Acco
u
Res nting
Stud earch
y No
.8
Normal cost
Past service cost
Prior service cost
Actuarial gains and losses
Minimum
Normal cost
Interest on unfunded prior or post
service cost
A provision for any vested benefit
Maximum
Normal cost
10% of past and prior service cost
Interest equivalent
Sheet
Pensio
Inform n
atio
Opposition by AICPA
Sheet
1.
2.
3.
3.
Pension Cost
Components:
Service cost
Interest cost
Return on plan assets
Amortization of unrecognized prior service cost
Amortization of gains and losses
Amortization of transition amount
Groups covered
The Employee
Retirement Income
Security Act (ERISA)
Goals
1.
2.
Other Postretirement
Benefits
ASC 715)
Service cost
Interest
Amortization of prior service costs
Amortization of transition amount
Disclosure
Postemployment Benefits
2.
2.
3.
4.
Financial Analysis of
Retirement Benefits
Tootsie Roll
International Accounting
Standards
The IASC has issued two standards
affecting accounting for retirement
benefits
1.
2.
1.
2.
a)
b)
c)
1.
2.
3.
Defined Benefit
provide information
about the plan and
the performance of
investments
provide information
that is useful in
assessing the
relationship between
plan resources and
future benefits