roswellpodsquad
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| Posted: 27 Nov 2009 at 19:06 | IP Logged
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1) For the calculation of the Net Pension Expense, the Return on Plan
Assets is calculated using the expected return multiplied by the beginning
FV of Plan assets.
Interest is calculated by using the discount rate multiplied by the
beginning PBO.
Net Pension Expense is not really adjusted for the difference between the
actual and expected return, at least not yet. What I mean, here is that if
there is a difference between the actual and expected return, this will
create the Gain/Loss in the current year. The Gain/Loss will be recored in
the current period and will have an effect on the Net Pension Expense in
future years when its amortized.
2) Amortization of a prior service cost mostly likely occurred in a PY as a
result of a plan amendment. The original JE was
Dr. OCI
Dr. Deferred Asset
Cr. Deferred Tax Benefit - OCI
Cr. Pension Benefit Asset/Liability
However, once we start amortizing we have to make a reclassification JE.
Dr. Net Pension Benefit Assets/Liability
Dr. Deferred Tax Benefit - I/S
Cr. Deferred Tax Benefit - OCI
Cr. OCI
If the question gives you the Unrecognized Prior Service Cost, they all you
have to do is amortized that amount. If you plan was amended, and you
recognized a prior service cost, then you would not amortize this in the
current year, but in future years. However, we still do recored the loss,
we're just not amortizing it yet.
3) Same thing for gain/losses. Most questions will give you the
unrecognized portion of the gain/loss and we just have to recored
amortization. If we have a CY gain/loss as a result of an actuarial
gain/loss or diff btwn actual and expected value of plan assets, we
recored the gain/loss. If future years we will amortize this, but not the
current year.
Please note, that the JEs for recording or amortizing gain will differ that
JE's for recording or amortizing a loss.
4) Pension Asset/Liability is the same thing as fund status. You need to
be able to calculate it both ways. They may not give you the PBO or FV of
Plan Assets but provide other information that effects the T account. So,
be aware of both calculations.
The accounts may either have a debit or credit balance depending on if its
over/underfunded. Contributions are a debit to the account, CY Net
Losses and Prior Service Costs from Amendments are Credits, & the Net
Period Pension Cost (only the SIR part) is a Credit. Amortization from AGE
does not effect this account. Additionally, any CY Net Gains will be a
debit to this account.
Hope that helps clarify any confusion.
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Topic: Pension
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