F14: Pensions

Question 1

Formula of interest cost when calculating pension expense

Answer 1

Beginning PBO x Discount Rate (Settlement Rate)

Question 2

Formula of prior service cost (PSC) amortization when calculating pension expense

Answer 2

• S/L Method
• Beginning PSC / Avg Service Life (Expected Future Years of Service)

Question 3

Formula of actual return on plan asset when calculating pension expense

Answer 3

• Beg FV of Plan Asset x Actual Return
• Ending PA - Beg PA - Contribution + Benefits Paid

Question 4

Formula of deferred G/L when calculating pension expense

Answer 4

Return on PA - Beginning PA x Expected Rate of Return