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39 Cards in this Set

  • Front
  • Back
When an uncertain tax provision is going to be recognized in the financial statements, what's the largest amount that can be recognized?
The largest amount of tax benefit that has greater than 50% likelihood of being realized.
wHAT'S THE FORMULA FOR THE NET POSTREITEMENT BENEFIT EXPENSE?
SIR AGE
Current service cost, interest, actual return, amortization of prior servic ecost, gain/loss amortization, amortize/expense transition ( net obligation)
wHEN DISCUSSING CONTINGENCIES, EXPLAIN THE DIFFERENCE BETWEEN
1. PROBABLE
2. REASONABLY POSSIBLE
3. REMOTE
1. likely to occur
2. more than remote, but less than likely
3. slight chance of ocurring
How is a reasonably possible contingency accounted for in the financial statements?
Disclose
Disclosure for remote losses are typically not required, except in these circumstances.
DOG
- Debts of others guaranteed
- obligations of commercial banks under standby letters of credit
- guarantees to repurchase receivables or other property that have been sold or assigned.
For postretirement benefits, must the transition obligation be expensed immediately or oamortized?
Either is acceptable
What's the differecne between net pension expense and the formula to determine the ending funded status?
The ending funding status adds contributions and does not include the amortization of the transition assets/obligations
When amortizing the transition obligation for postretirement benefits, what is the formula?
Amortize over average service life. If the period is less than 20 years, they may amortize over 20 years.
An operating loss can be treated in either of these 2 ways/.
1. Carryback two years, carryforward 20
OR
2. Elect to carry forward all 20 years
Know how to determine if an underfunded pension is a current or noncurrent liability.
n/a
What's the journal entry when recording pension expense to other comprehensive imcome?
OCI
Deferred tax asset
Deferred tax benefit - OCI
Pension benefit liability
Where in the financial statemetns must the funded status of pension plans be reported?
Balance sheet
There is a probably loss that can be estimated within a range. No amount in the range is more likely than the other. What amount should be recorded?
Minimum amount.
What is the attribution period for postretiremnet benefits?
The employee's working period until they are fully eligible (not when retired)
PENSIONS
Are prior service costs expenses or capitalized?
capitalized
Pensions
What is service cost?
Present value of allpension benefits earned by company employees in the current year.
What are the components of net pension expense?
SIR AGE - SIR PGT
current service cost, interest, expencted return on assets, amortization ofprior seric costs, gain/loss amortization, amortization of existing net obligation or net asset
What type of benefit plan is where the company makes multiple journal entries?
Defined benefit plans
What period are changes in tax laws recognized?
In the period of change
OTHER LIABILITIES
What is a premium?
offers to customers to stimulate sales (coupons, etc)
What threshold must be met before an uncertain tax benefti can be recognized in the financial statemtns?
More likely than not
If there is a change in circumstance that causes a change in judgment about the ability to realize a deferred tax asset, when should that change be recognized?
In the period of the change
How do you acocunt for a deferred asset/loiablility when the entity goes from a taxable entity to a nontaxable entity?
Write off the deferred asset/liability
Deferred tax items are classified as current or noncurrent based on this.
The asset or liability the deferred tax item relates to.
If not related to an asset or liability, then based on the expected reversal date.
Are overfunded pensions current or noncurrent assets?
Noncurrent
Public companies and other entities that intend to widely distribute financial statemtns must evaluate subsequent events through the date that the financial statemtns are issued. How does this differ from other entities?
Throught the date the financial statemtns are available to be issued
What's the journal entry when pension expense in other comprehensive income is recognized?
Net periodic pension cost
deferred tax benefit - oci
deferred tax benefit - net income
other comprehensive income
What tax rate doyou use for temporary differences?
1. Anticipated
2. Pro[osed
3. Enacted
4. Unsigned
Enacted
Can disclosuers for pension plans and post retirement benefits be combined?
No
If a company has multiple defined benefit pension plans, is the funded status calculated separately or as a whole?
separately
What is the postretirement plan also called?
The substantive plan
When does a pension settlement occur?
When the pension plan assets increase in value to the point that sale of the pension plan assets allows the company to purchase annuity contracts to satisfy pension obligations.
Name and describe the two non-gaap pension plan methods.
1. Pay as you go - cash basis of expenses, payments after someone has retired
2. terminal funding - company pays an entire pension liability upon retirement of an employee
Starting with beginning funded status and contributions, how do you determine the ending, funded status of a pension?
service cost, interest cost, expected return on assets, amortization of the prior service costs, net gains/losses
Explain the dividends received deduction for tax purposes.
ownership
0-19% - 70% exclusion
20-80% - 80% exclusion
over 80% - 100% exclusion
What's the difference between ABO and PBO?
PBO usees the present value of current and future salaries
What's the formula for the amortization of the existing net obligation or net asset at implementation for pensions?
PBO - FMV plan assets = unfinded obligation;
Unfunded obligation / the greater of (15 years OR average employee job life) = amortization
What are the sources of gains/losses on pensions?
1. Difference between the expected and actual return on plan assets
2. Changes in actuarial azssumptions
Explain how pension gain/loss is determined for the income statemetn.
Unrecognized gain/loss MINUS (10% of the greater of (a) PBO or b) market value ofassets) = Excess;
Excess / average remaining service period