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Flashcards in Employee Compensation and pension Deck (21):

When given vocation pay liability at the end of year one (35000), and then the current year vacation amount taken (20000), and vacation earned during the current year (30000), adjusted the current 10% salary increase. asking what is the vacation pay expense?

First of all, the 30000 is already adjusted for current earning, so no need to do anything. The previous year has 35000, and only 20000 was taken in the current year, so there are 15000 untaken amount, the salary is increase for 10%, the unpaid amount need to adjust for current salary level, which is 1500. So total increase would be 31500.


Pension plan investment is recorded at?



What is Funded status in pension plan?

The difference between PBO and PA at fair value


Can PBO subject to delayed recognition?

No, recognize immediately, unlike actual return less than expected, increase in life expectancy, and PSC


Disclosure requirement for defined benefit pension plan?

Description of plan, the amt of pension expense by components, weighted average discount rate.


JE for amortization of net gain.

Pension gain/ loss - OCI. Xx
Pension expense. Xx

Has no effect on pension liability but do decrease pension expense


Employee compensation payment for future absence is probable, can be reasonably estimated, the obligation relatedtk rights that accumulated, the compensation should?

Accrue when employee service is rendered.


Pension overfund and underfund and reporting

Over/under fund can't net together
Overfund is pension asset report as non-current asset
Underfund is pension liability as current or non-current liability or both


Companies must disclose the effect of 1% point increase would have on aggregated service and interest costs of the APBO (post-retirement benefit obligation) on health care benefits.

Companies must disclose the effect of 1% point increase would have on aggregated service and interest costs of the APBO (post-retirement benefit obligation) on health care benefits.


Defined benefit liability

U.S. GAAP called pension asset / liability

PBO- funded status= Plant asset /liability

IFRS: DBO ( similar to PBO)
- plan asset at FV
= funded status
+/- unrecognized net pension G/L
- unrecognized PSC
= defined benefit liability (in B/S)


IFRS: PSC vested amount expense right always, and the rest is amortized over certain period

How is IFRS treat PSC cost?


Where to record PSC and pension G/L?

PSC amortization increase pension expense,
G/L record increase PBO, not pension expense


JE for pension related items?

Pension expense record as

Pension expense Xx
Pension liability. Xx

Pension liability. Xx
Cash. Xx


When actual gain asset return is > expected return, it will have what effect on other accounts?

It will increase asset account, increase gain on AOCI, and a decease of pension liability


An over-funded single employer DBP should be recognized in what section of B/S?

Non-current asset section


Record for an expired stock option that will never be exercised, but recorded of a few years, what is the treatment of the compensation expense recording?

Increase contributed capital because at the grant date, the firm did provide value to employees that ha a FV, and the value of the capital is based on then value the employer give to employee.


How to record Stock option expense in current heard given three years total amount?

Divide by 3 to find one year's and record only one year expense


If the forfeiture rate in the second year is increased for a four year service period, what to do with compensation expense?

The new estimate is used to compute compensation expense for prior year and year of change. The resulting is the total amount of expense through the year of change-expense already recognized= the amount in the year of change. The new estimate continue to be applied to future years.
Example: 4 years service period, year 1 compensation is recognized as 250, in year two, the new balance become 2/4* change in total compensation amount, and then - year one recognized amount = this year recognized amount.


When stock option is exercised, the total stock option expense is reversed to get the net paid in capital. And the exercise price is even though given the market value, only record at the grant date market value.

For example:

Year one recognized option compensation expense of 2 years at 400 out of total of 1140, at the end, the JE, check stock compensation TBS

JE. Cash. At grand date market value
PIc-SO. 1140
C/S. Record at par
PIC. Rest


Stock appreciation right with grant date price and year end price with condition of can be exercised immediately after granting date, what is the compensation expense at the year end?

Shares of stock * ( end year price - beg year price)


For executive compensation plan involving stocks, what is the compensation expense?

Compensation expense for restricted stock award plan is the value determined at GRANT date