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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

When to accrue for sick pay

ONLY if vesting