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Future CPA
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| Posted: 26 Nov 2009 at 14:43 | IP Logged
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I have tried numerous pension questions, and listened to the lecture twice now. I am still averaging about 50% on those MCQs. Is there a trick to knowing them? For some odd reason, SIR-AGE doesn't help me either. My exam is this Saturday. How much of pension is the actual exam?
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Future CPA
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| Posted: 26 Nov 2009 at 14:51 | IP Logged
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Also, I know how to calculate each of the SIR-AGE components, but having trouble looking at the big picture.
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My inspiration: "O mankind! We have created you male & female, & have made you nations & tribes that ye may know one another. The noblest of you is the best in conduct."-Quran
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roswellpodsquad
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| Posted: 26 Nov 2009 at 15:21 | IP Logged
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What exactly are you having trouble with? If I know that, I may be able to
help you with that aspect.
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Future CPA
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| Posted: 26 Nov 2009 at 15:39 | IP Logged
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Maybe if I know how to report what on the OCI would help. The AGE gets amortized and reported in the OCI, right? How do I go about doing that?
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My inspiration: "O mankind! We have created you male & female, & have made you nations & tribes that ye may know one another. The noblest of you is the best in conduct."-Quran
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roswellpodsquad
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| Posted: 26 Nov 2009 at 16:11 | IP Logged
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Correct, the AGE get amortized and reported in Accumulated OCI.
- Amortization of Prior Service Cost, Net losses, and Net Obligations are
credits to OCI. Amortization of the above results in a reclassification
adjustment. These caused a decrease in OCI when originally recored
(prior to amortization) so the reclassification will cause a increase in
Accum. OCI
- Amortization of Net Gains and Net Assets will have the opposite effect.
The amortization is calculated following the regular AGE calculations
For example if you had the following
Amortization of PSC = 7,500
Amortization of a Loss = 6,000
Amortization of Net Obligation = 10,000
This gives us a total amortization of 23,500
The the JE would be, assume a 40% tax rate
DR. Net Periodic Pension Cost 23,500
DR. Deferred Tax Benefit - OCI 9,400
CR. Deferred Tax Benefit - I/S &nb sp; 9,4 00
CR. OCI &nb sp; &nb sp; &nb sp; &nb sp; &nb sp; 23,500
So the 23,500 will be used as a credit to the OCI T-account.
Had you had a Net Gain or a Net Asset then the reclassification JE would
be
DR. OCI (for the net of the net gain & asset)
DR. Deferred Tax Expense - I/S
CR. Deferred Tax Expense - OCI
CR. Net Pension Cost
The Dr. to OCI will show up as a debit to the OCI T account.
Remember thought that if we have a current year gain or loss or prior
service cost incurred due to a plan amendment, then these also have an
effect on OCI.
Prior Service Cost & CY Net Losses will be a debit to the OCI account & CY
Net Gains will be a credit.
Hope that helps. I understand how you feels the JE's are a little confusing
but just separate them into reporting the net loss, net gain, obligation,
asset, etc. & reclassification JE which report the amortization.
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