Exam 19: Post-Employment Benefits

What is the most critical value or amount in a defined benefit pension plan from the point of view of the financial statement user, and is this amount generally reported in the balance sheet for most firms? Explain.

Timu joined the firm 12 years ago and is 42 today.The firm has a post-retirement health care plan with the following coverages for retirees: Age above 65 at retirement and 30 years of service = 100% coverage Age 60-65 at retirement and 30 years of service = 75% coverage Timu is expected to retire at age 63.The present value today of 100% post-retirement health care coverage for Timu is $20,000, considering life expectancy and other factors.The present value of 75% coverage is $14,000.What is the accumulated post-retirement benefit obligation for Timu today?

Gains and losses from plan settlements and curtailments should be:

Jamieson's balance sheet as per IFRS for Year 1 would show a net:

In accounting for pension costs, any difference between current year's pension expense and contribution into the pension trust should be reported as a(n):

The funded status of Jamieson's defined benefit plan as at December 31st, Year 2 is:

When a pension plan is not trusteed, a company must report its pension plan assets and accrued pension liability on the balance sheet.

In a defined contribution pension plan the retirement benefits to the employee are not defined.

Recognition of pension expense is primarily based on the:

The amount of the expected return on plan assets is usually computed by multiplying the:

Under the simplified approach to accounting for defined benefit pension plans under ASPE, the actuarial cost method used for pension accounting will be different than that used for funding.

Jamieson's pension expense as per IFRS for Year 1 would be:

Current costs of a pension plan that occur each year due to service credits earned after the inception of the plan are called:

Under the simplified approach to accounting for defined benefit pension plans under ASPE, all past service costs and unrecognized actuarial gains and losses must all flow through pension expense immediately.

JTD began working for XYZ at age 45 and immediately qualified for the company pension plan.The retirement age in the company is 65 (i.e., 20 full years of employment for JTD).The pension specifies a $30,000 annual (year-end)pension benefit for JTD and the life expectancy is age 80 (i.e., the pension benefit will be paid for 15 years).Assume a constant 8% interest rate during the 20 working years, and a 7% constant rate during the retirement years per the actuarial estimates (assume all cash flows at year-end).XYZ plans to fund a constant amount per period at each year-end during the employment period. Required: (a)What amount of funds should be in the pension fund at the beginning of the first retirement year? (b)What amount should XYZ pay to the funding agency each year-end during the employment period? (c)Is it possible to determine pension expense for the first year of the plan?

A pension plan that gives an employee the right to retirement benefits which are not contingent upon the employee remaining with the company provides vesting benefits to the employee.

Employers who provide contractual termination benefits must recognize a loss and a related liability when:

Jamieson Corp. sponsors a defined benefit plan for its employee group. The following data pertains to the plan's first 2 years in existence: Additional information: - The plan was started on January 1st, Year 1, with $20,000 of funding - The company has a December 31st, year-end. - The plan is non-contributory. - The company's long-term debt is subject to a 6% discount rate. -The funded status of Jamieson's defined benefit plan as at December 31st, Year 1 is:

When a settlement gain or loss arises due to closing a business segment it is recognized as a debit or credit to (in):

Contributions made by an employer to a qualified pension plan usually are taxable to the employee at that time.