Flashcards in F6: Notecards (General) Deck (12):
1
Cost of retiree health and other post retirement (and post employment!) benefits must be accrued IF: (4 things)
1- obligation is attributable to services already rendered
2- employee's rights accumulate or vest
3- payment is probable
4- amount of benefits can be reasonably estimated
2
APBO
Accumulated Postretirement Benefit Obligation
-PV of future benefits that have vested as of the measurement date
-Discounted at an assumed discount rate
3
EPBO
Expected Postretirement Benefit Obligation
-PV of future benefits expected to be paid as of the measurement date
4
EPBO includes (2 things)
1- APBO plus
2- PV of expected future benefits not yet vested
5
How to account for postretirement benefits other than pensions in the Income Statement:
Benefit-years-of-service approach is used
6
Transition to accrual accounting done in one of two ways for postretirement benefits other than pensions:
1- Immediately expense as the effect of a change in accounting principle
2- Delayed recognition using straight-line amortization over 20 years
7
How to account for postretirement benefits other than pensions in the Balance Sheet:
Funded Status =
FV of plan assets
- APBO
= Funded status
8
Postemployement Benefits definition
Benefits paid to employees after their employment but before retirement
-NOT the same as post retirement benefits
9
Examples of post employment benefits
-Salary continuation
-Severance benefits
-Continuation of other fringe benefits (insurance)
-Job training
-Disability related stuff (workers comp)
10
2 types of deferred compensation and how accounted for
1- pension
2- post retirement plans
accrual basis
11
When to accrue for compensation for future absences (sick and pto)
Accrued in the year earned if ALL met:
-attributable to services already rendered
-obligation relates to rights that vest OR accumulate
-payment is probable
-amount is reasonably estimated
12