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33 Cards in this Set
- Front
- Back
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What's a plan asset actual return?
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This component of net periodic pension cost reduces the pension cost for the period. It is based on the FV of plan assets at the beg & end of the period, adj for contributions & benefits paid.
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What's interest cost?
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The increase in the PBO due to the passage of time. The int rate to be used in the calculation is the rate at which the pension benefit could be effectively settled. (assumed disc rate)
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What's G or L's on Plan Assets?
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The diff btw the actual return on assets during the period & the expected return on assets for the period.
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What's svc cost?
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The actuarial PV of benefits attributed by the pension benefit formula to the employee's svc during the period.
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What's prior svc cost amortization?
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This is the spreading of the cost of retroactive benefits generated by a plan amendment that granted increased benefits based on svc rendered in prior periods.
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What's the purpose in defined benefit plan reporting?
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To provide a measure of pension cost that reflects the terms of the underlying plan & recognizes the compensation cost of an employees pension benefits over the employees approxiamate svc period.
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What's actuarial present value?
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The value, as of a specified date, of an amt or series of amts payable or receivable thereafter, with each amt adjusted to reflect 2 things.
1. The time value of money 2. The probability of pymt btw the specified date & the expected date of pymt. |
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What is Attribution?
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The process of assigning benefits or costs to periods of employee service.
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What is an annuity contract?
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A contract in which an insurance company unconditionally undertakes a legal obligation to provide specified pension benefits to specific individuals in return for a fixed consideration of premium.
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What's a contributory plan?
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A pension plan under which employees contribute part of the cost. In some contributory plans, employees wishing to be covered must contribute, in other contributory plans, participants contributions result in increased benefits.
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What are assumptions?
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Estimates of the occurrence of future events affecting pension costs, such as mortality, withdrawl, disablement & retirement, changes in compensation & national pension benefits, & discount rates to reflect the time value of money.
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What is amortization?
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Systematic recognition in net pension cost over several periods of amounts previously recognized in OCI, that is, prior svc costs or credits, G or L's, and any transition asset or obligation existing at the date of initial application of these standards.
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What's an accumulated benefit obligation?
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The actuarial PV of benefits (whether vested or not) attributed by the pension benefit formula to employee svcs rendered before a specified date and based on employee svcs & compensation prior to that date.
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What are retroactive benefits?
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Benefits granted in a plan amendment (or initiation) that are attributed by the pension benefit formula to employee svcs rendered in periods prior to the amendment.
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What are Plan Assets?
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Assets (usually stocks, bonds, & other investments) that have been segregated & restricted (usually in a trust) to provide benefits. Plan assets include amounts contributed by the employer (and amts by employees if contr plan ) & amts earned from investing the contributions, less benefits paid.
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What's the market relate value of plan assets?
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A balance used to calculate the expected return on plan assets. Market related value can be either FV or a calculated value that recognizes changes in FV in a systematic & rational manner not over more than 5 yrs.
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What's the expected return on plan assets?
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An amt calculated as a basis for determining the extent of delayed recognition of the effects of changes in the FV of assets. The expected return on plan assets is determined based on the expected long-term rate of return on plan assets and the market-related value of plan assets.
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What's a Projected Benefit Obligation?
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The actuarial PV as of a date of all benefits attributed by the pension benefit formula to employee svc rendered prior to that date.
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What is a prior svc cost?
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The cost of retroactive benefits granted in a plan amendment.
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What's a funding policy?
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The program regarding the amounts & timing of contributions by the employer, participants, & any other sources, to provide the benefits a pension plan specifies.
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What's a pension benefit formula?
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The basis for determining pymts to which participants may be entitled under a pension plan. Pension benefit formulas usually refer to the employees svc or compensation or both.
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What is a defined benefit pension plan?
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A plan that defines an amount of pension benefits to be provided, usually as a function of one or more factors such as age, yrs of svc, or compensation.
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What is meant by offsetting liab & assets?
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The employers balance sheet reflects as a net amount the recognized values of assets contributed to a plan & the liabilities for pensions recognized as net pension cost of past periods.
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What are benefits?
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Participant benefits are determined by: the amts contributed to the participants accounts; returns earned on investments of contributions; & allocations of forfeitures of other participants benefits.
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What is meant by delaying recognition of certain events?
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Changes in the pension obligation and changes in the value of assets set aside to meet those obligations are not recognized as they occur.
They are systematically & gradually recognized over subsequent periods. |
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What is Net Pension Cost?
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NPC is the contribution called for by the plan for the period in which the individual renders svcs.
If the plan calls for contributions for periods after the individual has rendered svcs, the cost should be accrued during the employees svc period. |
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What is a defined contribution plan?
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Plans in which the terms specify how contributions to the individual participant accounts are to be determined.
*Not the benefits to be received* |
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What is meant by reporting net cost?
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The net cost aggregates at least 3 items that might be reported separately for any other part of an entity's operations.
3 parts 1. Compensation Cost 2. Int Cost resulting from deferring pymt 3. Return from investing the assets |
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What are the 3 fundamental aspects that shape financial reporting in the application of accrual accting to pensions?
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1. Delaying recognition of certain events.
2. Reporting net cost 3. Offsetting Liab & Assets |
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What is an Unfunded Projected Benefit Obligation?
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The excess of the projected benefit obligation over the FV of plan assets.
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What is the net periodic pension cost?
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The amount recognized in an employers f/s as the cost of a pension plan for a period.
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What are the Net Periodic Cost components?
(SIPPA) |
Svc Cost, Int Cost, Plan assets actual return, prior svc cost, Actuarial G or L's
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What's a vested benefit obligation?
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The actuarial PV of vested benefits.
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