The Employee Retirement Income Security Act (ERISA) requires that companies fund defined-benefit plans, but no such requirement exists for other postretirement benefits such as health insurance. Considering the characteristics of retirement benefits as compared to the characteristics of other postretirement benefits, what impact does this have on a company's financial statements?

The Employee Retirement Income Security Act (ERISA) requires that companies fund defined-benefit plans, but no such requirement exists for other postretirement benefits such as health insurance. Considering the characteristics of retirement benefits as compared to the characteristics of other postretirement benefits, what impact does this have on a company's financial statements?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 8Q

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The Employee Retirement Income Security Act (ERISA) requires that companies fund defined-benefit plans, but no such requirement exists for other postretirement benefits such as health insurance. Evaluate whether there should be a requirement that other postretirement benefits be funded.
Describe what factors contribute to the pension benefit obligation. Discuss the effect of the increase or decrease on the PBO. How is this change reported in the financial statements and what other accounts are affected? Provide an example from a publicly-traded company.
A statement of comprehensive income for a company with a defined benefit pension plan does not include a. net income. b. the return on plan assets. c. gains from the return on assets exceeding expectations. d. losses from changes in estimates regarding the pension obligation.
Which of the following does not affect the measurement of the defined benefit obligation?A. Changes in the market rate of high quality corporate bondsB. Changes in expected contributions to the fundC. Employee turnover rate, mortality and health conditionD. Expected changes in salary levels
Describe how a company's pension plans are reported when there are many plans, some of which are underfunded and others which are overfunded.
What benefits accrue to companies who elect to use pension funds? How does the use of a pension fund change the accounting that must be done with respect to employee pension amounts?
Accounting Which of the following statements is not correct about defined contribution plans? A. The employer controls the investment choices on the employees' behalf. B. The promise is the amount of contributions the employer will make periodically. C.The size of payments depends on success of investments. D. No explicit promise is made about the size of the periodic benefits the employee will receive during retirement.
What does the “pension asset” represent? Are you interviewing with a company whose pension plan is severely underfunded?
Discuss the principles and methods of accounting for pensions and other post-employment benefits. Analyze the challenges involved in measuring and reporting these benefits and their impact on a company's financial statements.
Which of the following is a characteristic of the accumulated benefit obligation measurement? Group of answer choices It considers only vested employees. It considers only current employees. It does not use projected future salary levels. It is required by GAAP for measurement of the pension obligation.
Which of the following is/are true with regard to accounting for short-term employee benefits? Unpaid short-term benefits are reported as accrued under current liabilities at an undiscounted value. If the payment exceeds the undiscounted amount of the benefits, the excess is reported as prepayment under current assets. The benefits are reported as an expense under profit or loss, unless another standard requires or permits the cost of the benefits to be capitalized. Group of answer choices Only statement 1. All statements are true. Only statement 3. Only statement 2.
Which of the following statements are disadvantages for the employer-sponsor of a cash balance pension plan? 1)A certain level of plan benefit is guaranteed by the PBGC. 2)The employer bears the investment risk in the plan. 3)Cash balance pension plans are less expensive for the employer than a traditional defined benefit pension plan. 4)Retirement benefits may be inadequate for older plan entrants Answer list below a) 2, 4 b) 1, 2 c) 1, 3 d) 3, 4