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F7 Flashcards

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1
Q

Actual return on asset for pension plan

A 
Beginning Assets
\+Contribution
\+Actual Return (squeeze)
-Benefits paid
=Ending balance
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2
Q

Accumulated Benefit Obligation

A

PV of future retirements payment based on current and past compensation levels

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3
Q

Projected benefit obligation

A

PV of future retirements payment based on current and past and FUTURE compensation levels

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4
Q

Return on Plan Asset (BS Asset) FV of Plan Asset

A 
Beginning balance
\+Contribution
\+Return (market)
-Benefits paid
=Ending Balance
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5
Q

BS liability (Projected Benefit Obligation)

A 
Beginning balance
\+Service cost
\+Interest cost
\+Prior service Cost 
\+Actuarial losses
-Actuarial gains
-Benefits paid
=Ending Projected Benefit Obligation
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6
Q

Unrecognized gain/loss is amortized over avg remaining service life.

A

Recognized only EXCESS OF 10% of PBO liabilities/Market Related Value (greater)
Unrecognized gain/loss
- 10% 0f PBO or Mkt related value (Greater)/# of years
=Amortization of unrecognized gain/loss

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7
Q

Amortization of Existing Net Obligation

A

Projected benefit obligation
-FV Plan Asset/15 years of Avg employee job life (greater)
=Minimum amortization

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8
Q

Net Periodic Service cost

A

+Service Cost Current
+Interest Cost (Discount RateBeg PBO)
-Expected Return on Asset (Expected RateBeg Assset)
+Amortization of Prior Service Cost (strait line)
-Amortize UNRECOGNIZED Gain/Loss in OCI (corridor greater 10%of Beg bal Asset or PBO ) If it’s less-Ignor
+Amortization of Existing Net Obligat/Asset FV/# years of 15
years (greater)
=Net Periodic Pension Cost

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9
Q

Funded Status

A

Asset- PBO

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10
Q

Actuarial gain/loss-include Net in PBO Base calculation

A

Amortization of Prior Service Cost/Existed Net obligations included in Net Periodic Pension Cost

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11
Q

Amortization of actuarial gain/loss

A

include in Net Periodic Pension Cost

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12
Q

PBO vs Plan Asset formula

A

The only similarity - Benefits paid

The rest of the components are different

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13
Q

Net Gain to be reported in OCI

A

Difference Actual Return on Asset (squeeze formula) - Expected Return on Asset (Beg FV of Asset*Expected Rate)

DR Pension Liability/Asset
CR OCI

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14
Q

Pension Gain/Loss can be recorded in OCI

A

Unrecognized Prior Service Cost -Increase of PBO DR OCI/CR Pension Obligation
Unrecognized Prior Gain
DR Pension Liability/CR OCI

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15
Q

Net Periodic Pension Cost

A 
\+Service Cost
\+Interest Beg PBO*Discount
-!Expected Return on Asset
\+Amortization of Unrec Cost/Avg years
-! Amortization of Unrec Gain/Avg years
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16
Q

Under IFRS

A

Gain/Loss are not amortized from OCI to IS

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17
Q

Amortization of unrecognized gain in OCI is equal

A

Beginning of OCI
+CURRENT period gains
-Amortization (squeeze)
=Ending OCI balance

DO NOT INCLUDE GAIN FORM PRIOR PERIOD

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18
Q

Net Periodic Pension Cost is measured using

A

PBO. Service cost represents increase in PBO resulting from service in current yeat

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19
Q

FV PBO ending

A 
Beg PBO
\+Service Cost
\+Interest
\+Current Period Cost
-Current Period Gain
-Benefits Paid
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20
Q

Current/Prior period Gain/Loss and Amortizations run through

A

OCI

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21
Q

Prior Service Cost and Pension loses/ Gains Recognition in BS

A

JE Recognition
DR OCI (Goes to AOCI)
CR Pension benefit Asset/Liability

JE Amortization to SIRAGE
DR Net Periodic Pension Cost
CR OCI (Take out of AOCI)

JE Recognition of Gain
DR Pension Asset/ Liability
CR OCI

JE Amortization to SIRAGE
DR OCI
CR Net Periodic Cost

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22
Q

Pension Accounting Relationships

A

Income Statement SIRAGE
Balance Sheet BASE/PBO
Equity AOCI Unrecognized cost/gain/

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23
Q

Accumulated benefit obligation

A

Is not used to compute funded status

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24
Q

Pension Plan Liability Reported if

A

a negative funded status exists PBO and Asset as of end of the year

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25
``` Reported in AOCI Amortization of the net gain decrease OCI (out of OCI, Reclass adjustment) ```
-Gain/ +Loss Prior Service Cost (minus amortization) Net transition asset/obligation
26
Amortization of prior service cost (Unrealized Prior cost sitting in OCI we need to more/amortize 1 year portion to Expense
DR Net Periodic Cost | CR OCI
27
Amortization of gain
``` 1 JE DR Liability CR OCI 2 JE Amortization DR OCI CR Net Periodic Pension Cost ``` IF CURRENT PERIOD GAIN DR Asset CR OCI
28
Actuarial GAIN JE
DR Pension Liability CR OCi DR OCI CR Net Periodic Pension Cost
29
Underfunded Plan (Liability) report non current. Report Current only shortage for next year payment
Pension plan with positive balance | Always reported as NON CURRENT Asset
30
A company will record DR to OCI in case of Amortization of prior period net gain
``` 1) To record Gain DR Pension Asset CR OCI 2)Amortize prior period gain in future: DR OCI CR Pension Cost ```
31
JE CR to OCI will result from | JE for actual return higher than expected
DR Pension Asset/Liability CR OCI (gain) Do not take in to account Tax Rate
32
Calculating change in funded status (A-L)
``` Take in to account only: Prior Service Cost! IGNOR (It's Net Periodic Cost): Amortization of Net loss Amortization of Prior Service Cost ```
33
For Cunnent/Noncurret Assets Liability in BS
Use funded status
34
Attribution Period for Post retirement Benefits
From date of hire till date when employee became eligible and PRB assigned
35
Retained earnings
Net income -Dividends declared +/- Adjustments of prior period +/- Accounting changes reported retrospectively
36
Gain/Losses on Treasure Stock
NEVER RECORDED IN INCOME STATEMEN Gain-additional paid in capital Loss-1st AP in Capital, then Retained earnings
37
JE for Treasury Stock Cost Method Under Cost Method Ret Earnings NEVER GO UP, Gain Increase APIC Use Ret Earnings only in Resell JE in Cost method
1. Shares Issued DR Cash CR Common stock (par) CR APIC Com Stock 2. Shares Purchased back DR Treasury Stock (cost/Price) CR Cash 3. Reissued Sold Back above cost NO RETAINED EARNINGS! DR Cash CR Treasury Stock(cost) CR APIC (SP-Coast) ``` Reissue sold back below cost DR Cash DR APIC TS (FROM PRIOR JE) DR Retained Earnings above cost CR Treasury Stock ```
38
JE for Treasury Stok Par Value Method Use Ret Earnings only in bought back par method
1. Shares Issued DR Cash CR Common stock (par) CR APIC Com Stock ``` 2. Shares Purchased back DR Treasury Stock (par) DR APIC (Par-Issue price JE1) DR Retained Earnings (plug)excess of APIC CR Cash ``` 3. Reissue of shares DR Cash CR Treasury Stock CR APIC (SP-PAR) If Reissue below price DR APIC Treasure Stock 1st and then Plug Retained ernings
39
Book value per share common stock
Common stockholders Equity/Common Shares Outstanding
40
If reacquisition price is less than Par/original issue price gain CR to APIC
DR Treasury stock at par CR APIC CR Cash
41
If reacquisition price is more than Par/original issue price loss DR to Retained Earning
loss DR to Retained Earning
42
Participating preferred stock splits dividends with common stock shareholders only AFTER
Common stock shareholders received dividend equivalent to preferred stock dividends
43
JE to record the retirement of shares under cost method
DR Common stock #*par DR APIC #*(SP*par) DR Retained earnings (plug) CR Treasury Stock #* purchased price
44
Repurchasing common stock outstanding by issuer
Will lower total stockholders equity and total capital available, as the treasury stock is the contra asset account. Debt/ Equity account Increases
45
JE for stock retirement
DR Stock CR APIC (plug) CR Cash Paid
46
When you calculating Book Value per common share
Deduct Preferred Stock , Preferred St Dividends and Bonuses
47
In Reissuing (selling again) stock under cost method if price below cost
CR APIC | CR Ret Earnings (Remainder)
48
Under Cost Method
Only APIC T/S!
49
JE Stock Dividends Issued
DR Retained Earnings | CR Common Stock
50
``` Stock Dividends JE DR Retained Earning CR Common stock CR Paid in Capital ```
Small Stock Dividend less than 20%FMV | Dividends greater than 25% Par
51
Stock dividends declaration
FMV of stock dividend at declaration date transfers from Retained Earnings to Capital Stock and APIC.
52
Paid stock dividends
Increase APIC, Decrease Retained Earnings
53
Stock dividends and stock splits are not considered as income for recipients
Dividends are not recorded at FA in any method (Cost or Equity)
54
2 to 1 stock split
Double # of shares e.g. 100,00 beginning balance, after 2 to 1 split =200,000
55
Small stock dividend less than 20%
Reduce Retained Earnings at FV Price=#of shares*FV DR Retained Earnings CR Common Stock CR APIC
56
Calculate # of common stock shares ISSUED
Issued shares (Do not reduce for treasury stock and do not include sold treasury stock) Add + New stock issued +Stock split if 2 to 1 (#*2)
57
If property dividends distributed
Take Market value- Book value to calculate gain/loss on disposal
58
Calculate the # of common stock shares outstanding
Issued -Treasury stock +Sold unissued previously * Split 2 to 1
59
Cost of stock rights formula=
(FMV of rights/(FMV of rights+FMV of stock ex-rights))*Cost of Stock
60
At what amount Note Receivable s/b reported in BS?
If Note Receivable > 1 year | FV+interest accrued for all years*PV annuity factor
61
Benefit Pension Plan in OCI
Unrecognized Gain favorable for OCI DR PBO (Liability) CR OCI Unrecognized prior period cost DR OCI CR PBO Liability
62
Government accounting
Government wide FS-Operational | Funds-Fiscal accountability
63
Net Cash receipts of bond issuance
Sales Price+Accrued interest if bond issued not in January-Bond Issuance cosrt
64
lower of cost or market
Middle value of: - replacement cost - market ceiling NRV (Price-Cost to complete) - market floor NRV-Profit
65
GASB 34
Report additional and detailed info about primarily government

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