Current accounting standards require that the discount rate used for pension plans be: Multiple Choice estimated future average market rates. the rates at which the pension benefits could effectively be settled. current market rate for the year. the average market rate since the beginning of the plan.
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Current accounting standards require that the discount rate used for pension plans be:
-
estimated future average market rates.
-
the rates at which the pension benefits could effectively be settled.
-
current market rate for the year.
-
the average market rate since the beginning of the plan.
As per IAS 19 discount rate used for pension plans be considered as following
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- The return on plan assets is the increase in plan assets (at fair value), adjusted for contributions to the plan and benefits paid during the period. How is the return included in the calculation of the periodic pension expense?Please answer the following questions about defined benefit pension plans: Companies with defined benefit pension plans must recognize pension expenses each period. What are the five components of pension expense? Briefly describe each component. How does each component of pension expense affect pension expense during the period (increase, decrease, or uncertain)? What is the difference between the accumulated pension obligation and the projected pension obligation? What determines whether a pension plan is underfunded or overfunded?Net interest cost is a component of pension expense under IFRS. How is net interest cost calculated? Select one: O a. The increase in the DBO over the period, net of the increase in the plan assets over the period. O b. Interest expense on the DBO, net of actual interest income earned on plan assets. O c. Interest expense on the defined benefit obligation (DBO), net of expected interest income earned on plan assets. O d. The increase in the DBO over the period, net of the increase in the plan assets over the period.
- What interest rates may be used to calculate the pension expense's interest component?Based upon this information, how would I make the following journal entries? Record annual pension expense. Record the change in plan assets. Record the change in the PBO. Record the cash contribution to plan assets. Record the retiree benefits paid.Define the interest cost component of the periodic pension expense.
- Assume that actual returns and expected returns to plan assets in a defined benefit pension plan are +$10 and +$12, respectively. What is the effect in the current period on pension expense? Select One: a.Pension expense is increased by $10 b.Pension expense is reduced by $10 c.Pension expense is reduced by $12 d.None of the listed answersQuestion Content Area ERISA (Pension Reform Act of 1974) provides guidance for actual return on plan assets minimum funding during the year accumulated benefit obligation projected benefit obligationsIn determining the present value of the prospective benefits (often referred to as the defined benefit obligation), the following are considered by the actuary: retirement and mortality rate. interest rates. benefit provisions of the plan. all of these factors. In accounting for a defined-benefit pension plan an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the benefits promised. the employer's responsibility is simply to make a contribution each year based on the formula established in the plan. the expense recognized each period is equal to the cash contribution. the liability is determined based upon known variables that reflect future salary levels promised to employees. Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation? Vested benefit obligation Accumulated benefit obligation Defined benefit…
- SFAS No. 87, “Employers’ Accounting for Pensions,” requires an understanding of certainterms. Discuss the following components of annual pension cost:i. Service costii. Interest costiii. Actual return on plan assetsiv. Amortization of unrecognized prior service costv. Amortization of the transition amountDefined contribution plans and defined benefits plans are two common types of pension plans.choose the correct statement concerning these plans: a.The required annual contribution to the plan is determined by a formula or contract in a defined contribution plan b.both plans provide the same retirement benefits c.the retirement benefit is usually determinable well before retirement in a defined contribution plan d.In both types of plans,pension expenses is generally the amount funded during the yearIn computing the interest component of pension expense, what interest rates may be used?