Here are the key additional factors that can affect a company's projected benefit obligation (PBO) for its pension plan:
- Liability gains or losses from changes in actuarial assumptions like the discount rate or expected salary growth rate.
- Changes to the pension contract that sweeten or enhance benefits, which increase the PBO.
- Changes to the pension contract that sour or reduce benefits, which decrease the PBO.
These additional factors relate to changes in the actuarial assumptions underlying the pension liability calculation or modifications to the contractual pension benefits owed to employees. They provide sources of increases or decreases to the PBO beyond the normal ongoing service cost and interest cost factors.
This document discusses key concepts related to risk and uncertainty in capital budgeting. It defines risk as the possibility that actual returns will deviate from expected returns, while uncertainty refers to situations where the probabilities of outcomes cannot be estimated. It also covers standard deviation and the coefficient of variation as measures of risk, and how firms can incorporate risk into capital budgeting decisions through using risk-adjusted discount rates or certainty equivalents. Diversification and a project's systematic versus unsystematic risk in a portfolio context are also addressed.
This document summarizes a company's cafeteria plan that allows employees to save on taxes for dependent daycare expenses. Through a flexible spending account (FSA), employees can set aside pre-tax income to pay for daycare. This reduces taxable income and saves on taxes. For example, an employee saving $200 per month on daycare expenses could save $75 in taxes annually compared to paying with post-tax income. The FSA covers daycare costs for dependent children under age 13 and dependents unable to care for themselves due to disability. Employees can choose to receive the tax savings as added benefits or higher take-home pay.
The document provides two draft alternatives for determining cash flows from reinvested assets in life insurance reserve calculations. It requests comments on the draft by a certain date. The draft includes sections on minimum reserves, net premium reserves, deterministic reserves, stochastic reserves, cash flow models, reinsurance, and assumptions. It establishes principles for principle-based reserves for life insurance products in accordance with the Standard Valuation Law.
This document discusses simple and compound interest. It provides formulas for calculating simple interest (I = PRT), future value with simple interest (A = P(1 + RT)), and compound interest (A = P(1 + i)n). It explains that compound interest is calculated on both the principal and accumulated interest over time, making it grow faster than simple interest. Examples are provided to demonstrate calculating interest, principal, rates, and time periods using these formulas. The key difference between simple and compound interest formulas is that the interest rate is an exponent for compound interest.
StudsPlanet is an education consulting firm based in India. The document discusses compensation issues for international human resource managers. It covers key components of international compensation packages such as base salary, foreign service premiums, allowances for housing and education, and benefits. The two main approaches to international compensation - the going rate approach and balance sheet approach - are also outlined, along with their advantages and disadvantages. Special issues around taxation and cost of living adjustments are examined.
Valuation of shares & bonds NOTES @ BECDOMS Babasab Patil
This document discusses valuation of shares and bonds. It covers:
1) Calculating the intrinsic value of a security based on the required rate of return and determining if it is underpriced or overpriced compared to the current market price.
2) Calculating the expected rate of return of a security based on its current market price and determining if it is underpriced or overpriced compared to the required rate of return.
3) Methods for calculating the price and intrinsic value of bonds, preference shares, and ordinary shares. This includes determining the expected rate of return for each type of security.
This document provides an overview of health and welfare benefits as well as retirement and savings plans offered by Lincoln. The benefits include medical, dental, vision, life and disability insurance, as well as 401k, pension, and deferred compensation plans. Premiums, contributions and eligibility requirements vary depending on factors such as income level and years of service. The plans are subject to amendment by Lincoln and the official plan documents will govern in all cases.
This document summarizes involuntary separation pay policies for the Navy. It defines involuntary separation and eligibility criteria, such as completing 6-20 years of service with an honorable discharge. Sailors who agree in writing to serve in the Ready Reserve for at least 3 years after separation are eligible for full separation pay. Those who do not affiliate or are not accepted receive half pay. The document outlines full pay calculation and exceptions qualifying for half pay. It also notes required SPD codes on DD-214s and that no pay is given to those retired, with less than 6 years, or voluntarily separating.
This document discusses key concepts related to risk and uncertainty in capital budgeting. It defines risk as the possibility that actual returns will deviate from expected returns, while uncertainty refers to situations where the probabilities of outcomes cannot be estimated. It also covers standard deviation and the coefficient of variation as measures of risk, and how firms can incorporate risk into capital budgeting decisions through using risk-adjusted discount rates or certainty equivalents. Diversification and a project's systematic versus unsystematic risk in a portfolio context are also addressed.
This document summarizes a company's cafeteria plan that allows employees to save on taxes for dependent daycare expenses. Through a flexible spending account (FSA), employees can set aside pre-tax income to pay for daycare. This reduces taxable income and saves on taxes. For example, an employee saving $200 per month on daycare expenses could save $75 in taxes annually compared to paying with post-tax income. The FSA covers daycare costs for dependent children under age 13 and dependents unable to care for themselves due to disability. Employees can choose to receive the tax savings as added benefits or higher take-home pay.
The document provides two draft alternatives for determining cash flows from reinvested assets in life insurance reserve calculations. It requests comments on the draft by a certain date. The draft includes sections on minimum reserves, net premium reserves, deterministic reserves, stochastic reserves, cash flow models, reinsurance, and assumptions. It establishes principles for principle-based reserves for life insurance products in accordance with the Standard Valuation Law.
This document discusses simple and compound interest. It provides formulas for calculating simple interest (I = PRT), future value with simple interest (A = P(1 + RT)), and compound interest (A = P(1 + i)n). It explains that compound interest is calculated on both the principal and accumulated interest over time, making it grow faster than simple interest. Examples are provided to demonstrate calculating interest, principal, rates, and time periods using these formulas. The key difference between simple and compound interest formulas is that the interest rate is an exponent for compound interest.
StudsPlanet is an education consulting firm based in India. The document discusses compensation issues for international human resource managers. It covers key components of international compensation packages such as base salary, foreign service premiums, allowances for housing and education, and benefits. The two main approaches to international compensation - the going rate approach and balance sheet approach - are also outlined, along with their advantages and disadvantages. Special issues around taxation and cost of living adjustments are examined.
Valuation of shares & bonds NOTES @ BECDOMS Babasab Patil
This document discusses valuation of shares and bonds. It covers:
1) Calculating the intrinsic value of a security based on the required rate of return and determining if it is underpriced or overpriced compared to the current market price.
2) Calculating the expected rate of return of a security based on its current market price and determining if it is underpriced or overpriced compared to the required rate of return.
3) Methods for calculating the price and intrinsic value of bonds, preference shares, and ordinary shares. This includes determining the expected rate of return for each type of security.
This document provides an overview of health and welfare benefits as well as retirement and savings plans offered by Lincoln. The benefits include medical, dental, vision, life and disability insurance, as well as 401k, pension, and deferred compensation plans. Premiums, contributions and eligibility requirements vary depending on factors such as income level and years of service. The plans are subject to amendment by Lincoln and the official plan documents will govern in all cases.
This document summarizes involuntary separation pay policies for the Navy. It defines involuntary separation and eligibility criteria, such as completing 6-20 years of service with an honorable discharge. Sailors who agree in writing to serve in the Ready Reserve for at least 3 years after separation are eligible for full separation pay. Those who do not affiliate or are not accepted receive half pay. The document outlines full pay calculation and exceptions qualifying for half pay. It also notes required SPD codes on DD-214s and that no pay is given to those retired, with less than 6 years, or voluntarily separating.
The document is a study guide for a final quiz covering topics from weeks 4 and 5 of a personal finance course. It lists the key objectives, readings, and content areas to study for the quiz, including insurance types and functions, tax planning, filing taxes, investment planning processes, and retirement income needs and sources. The guide is intended to help students prepare and focus their studying on the most important topics that may appear on the final quiz.
Bonds are fixed income securities that promise regular interest payments and repayment of principal at maturity. There are various types including treasury bonds, corporate bonds, and treasury bills. Key bond characteristics include par value, coupon payments, coupon rate, maturity date, and whether it is a floating or zero coupon bond. The bond indenture contract specifies payment terms, collateral, covenants, and other details. Bond valuation considers factors like coupon payments, yield, number of periods, and maturity value. Bond prices are affected by yield to maturity, time to maturity, and coupon size.
The document discusses bonds and their valuation. It begins by outlining key bond characteristics like par value, coupon payments, maturity date, and call provisions. It then explains how to value a bond by discounting its expected cash flows. Specifically, a bond's value is the present value of the coupon payments plus the par value at maturity, discounted at the appropriate interest rate. The value of a bond depends on factors like the coupon rate relative to market interest rates.
The document defines three types of employees in a multi-national company: parent country nationals (PCNs) who are assigned to a foreign subsidiary, host country nationals (HCNs) who work in their home country subsidiary, and third country nationals (TCNs) who are hired in a foreign subsidiary. It provides examples of compensation packages for each type, noting that PCNs and HCNs receive home country-based salaries plus expat allowances and benefits, while TCNs receive local salary and benefits only.
1) Government pension plans like the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) provide retirement benefits that individuals are entitled to if they have lived and contributed in Canada. Benefits can begin between ages 60-70, with reductions for early receipt and increases for delayed receipt.
2) Registered Retirement Savings Plans (RRSPs) allow individuals to shelter retirement savings from taxes. At retirement, RRSPs must be converted to a Registered Retirement Income Fund (RRIF) or other income-generating options like annuities or cash.
3) Retirement income options involve balancing tax implications, longevity risks, and income needs over a potentially long retirement. Professional
1. The document provides a comprehensive financial plan for Mr. Kumar and family, including analysis of their income, expenses, investments, insurance policies, retirement plans, and assets and liabilities.
2. It makes recommendations to sell some existing equity investments and mutual funds to reallocate the portfolio according to ARB's proposed strategy.
3. The plan also analyzes retirement funds, fixed income investments, real estate holdings, tangible assets, and liquid assets to optimize the overall financial plan.
The document discusses pensions in the UK, including the main types: basic state pension, state second pension, occupational pensions, stakeholder pensions, group personal pensions, and personal or individual pensions. It provides details on state pensions, occupational pensions, individual pensions, stakeholder pensions, and group personal pensions. Key aspects like pension contribution calculation, pension tables, and reports are summarized.
This document provides an overview of social insurance programs in the United States, with a focus on Social Security. It begins with definitions of income and income maintenance programs. It then discusses the two major tiers of welfare policy: reducing poverty through social assistance programs, and providing income security through social insurance programs like Social Security. The bulk of the document details Social Security, including its history, components, funding through payroll taxes, benefits provided, impact on poverty rates, and debates around proposed reforms to address projected shortfalls in coming decades.
Mkt#210 lecture 3 entrepreneurial motivation & mobilityKawser Ahmad Sohan
This document discusses theories of motivation and factors influencing entrepreneurship. It describes Maslow's hierarchy of needs and McClelland's theory of three needs - need for affiliation, power, and achievement. The need for achievement is found to dominate in entrepreneurs. Factors influencing entrepreneurial motivation include internal drives and external supports. The document also examines factors influencing occupational and location mobility of entrepreneurs such as education, experience, facilities, and political conditions.
1) The National Pension Scheme (NPS) is India's efficient contribution-based pension system that aims to provide income during old age, safe market returns over the long term, and extend pension coverage to all citizens.
2) All Indian citizens between 18-60 years can invest in NPS through individual accounts or jobs with the central/state governments or corporations. The minimum contribution is Rs. 500 per transaction and Rs. 6,000 annually.
3) Investors can choose between active funds selecting equity, debt, or fixed income allocations, or let their portfolio automatically adjust based on their age through a lifecycle fund option.
Chapter 22_Insurance Companies and Pension FundsRusman Mukhlis
This document summarizes key topics related to insurance companies and pension funds. It discusses the fundamentals of insurance, types of insurance like life and health insurance, and how insurance companies are organized and regulated. It also covers the different types of pension plans like defined benefit and defined contribution, and how pension plans are regulated in the US by acts like ERISA.
This document provides an overview of pension plans in India, including:
1. It defines what a pension is and discusses the advantages of pension plans such as less risk, immediate returns, and tax benefits.
2. It outlines the different types of pension policies including traditional and unit-linked policies and how they differ in terms of investment strategies and returns.
3. It discusses important factors to consider when choosing a pension plan like bonus calculation, life cover, sum assured, and expenses.
The document provides information about pension plans in India. It discusses that PFRDA regulates the pension sector in India and was established in 2003. It then explains what pension plans are, how they provide individuals with a regular income in retirement. It also discusses the history of pension plans shifting from employer-provided to individual plans. Finally, it outlines the key factors to consider to calculate a retirement corpus and describes different types of pension plans and annuity options available.
This document discusses retirement planning and the different phases of retirement. It outlines common reasons people retire such as health, caregiving responsibilities, or job loss. The planning phase involves preparing financially for retirement over 20-30 years and getting personal affairs in order. The adjusting phase entails developing interests outside of work and adjusting to a new lifestyle and schedule. The enjoyment phase is focused on pursuing hobbies, staying active and using discounts. The settling in phase recognizes that some retirees live actively while others struggle with purpose and health issues in retirement.
The document discusses several factors related to entrepreneurial motivation and characteristics. It outlines that locus of control, need for achievement and independence, and willingness to take risks are key motivations. Entrepreneurial characteristics are shaped by one's childhood, education, values, age, work history, role models, and support systems. The document also examines background, motivational, economic, and reward factors that influence entrepreneurship. Finally, it outlines various personal, environmental, financial, and societal barriers that entrepreneurs may face.
The document discusses India's social security system. It defines social security and outlines its key features and objectives. It describes several acts that provide social security benefits like compensation for work-related injuries, medical benefits, maternity benefits, gratuity payments, and pension schemes. However, it notes that social security mostly covers organized sector workers and there is a need for effective implementation. The Unorganized Sector Workers' Social Security Act of 2005 was introduced to extend benefits to informal sector workers as well.
The document discusses social security in India. It defines social security according to the ILO and outlines its key purposes. Social security in India includes preventive, promotional, and protective schemes. Major protective schemes discussed are Employees' State Insurance (ESI), Employees' Provident Fund (EPF), Workmen's Compensation, Payment of Gratuity, and Maternity Benefit. ESI provides healthcare and income support in cases like sickness, injury, unemployment, etc. EPF provides retirement benefits. The document also briefly outlines other schemes like CGHS and those under the National Social Assistance Programme.
1. The document discusses planning and saving for retirement, including estimating costs of one's desired lifestyle and identifying sources of retirement income such as pensions, 401ks, IRAs, Social Security, and other savings vehicles.
2. It explains compound interest and its power to grow savings over time, demonstrating concepts like the Rule of 72.
3. The importance of starting to save and plan for retirement early is emphasized.
The document discusses retirement planning and provides information about retirement benefits. It covers topics such as the importance of retirement planning, sources of retirement income like government and company programs, retirement benefit schemes, and strategies for retirement planning such as maximizing workplace savings and establishing IRAs. The document aims to help people understand retirement and the need for financial planning to ensure a comfortable retirement.
This document discusses social mobilization, which is defined as motivating communities to organize and actively participate in their own development. It involves five main approaches: political mobilization to gain policy commitment, community mobilization to inform local leaders, government mobilization to enlist cooperation, corporate mobilization to gain business support, and beneficiary mobilization to motivate program participants. Key elements of social mobilization include partnership building, community participation through various levels of involvement, using media to raise awareness, and advocacy to mobilize resources and create policy change. The Pantawid Pamilyang Pilipino Program is provided as an example of beneficiary mobilization through its conditional cash transfers.
This document outlines key issues related to accounting for income taxes including differences between book and taxable income, permanent and temporary differences, deferred taxes, components of income tax expense, and required financial statement disclosures. It defines important terms and provides examples of how different tax situations are accounted for including timing differences, deferred tax assets and liabilities, and net operating losses.
I need help with the one indicated in (X).Analyzing and Interpreti.pdfallurafashions98
I need help with the one indicated in (X).
Analyzing and Interpreting Pension Disclosures
Assume E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to
its retirement plans ($ millions).
2010
2009
The following benefit payments, which reflect future service, as appropriate, are expected to be
paid:
Pension Benefits($ millions)20102009Change in benefit obligationBenefit obligation at
beginning of year$ 22,849$ 22,935Service cost383388Interest cost1,2281,192Plan participants'
contributions139Acturarial loss (gain)(728)(244)Benefits paid(1,544)(1,506)Amendments--
(1)Net effects of acquisitions/divestitures576Benefit obligation at end of year$ 22,206$
22,849Change in plan assetsFair value of plan assets at beginning of year$ 22,249$ 20,132Actual
gain on plan assets1,9273,306Employer contributions277280Plan participants'
contributions139Benefits paid(1,544)(1,506)Net effects of acquisitions/divestitures--28Fair value
of plan assets at end of year$ 22,922$ 22,249Funded statusU.S. plans with plan assets$ 2,365$
892Non-U.S. plans with plan assets(90)(317)All other plans(1,559)(1,515)Total$ 716$ (940)
Analyzing and Interpreting Pension Disclosures Assume E.I. Du Pont De Nemours and Co.'s 10-
K report has the following disclosures related to its retirement plans (\$ millions).
The following benefit payments, which reflect future service, as appropriate, are expected to be
paid:
HINT: Do not use negative signs with your answers. (a) How much pension expense (revenue)
does DuPont report in its 2010 income statement? DuPont reports pension of $ million. (b)
DuPont reports a $1,799 million expected return on pension plan assets as an offset to 2010
pension expense. Estimate what the expected return would have been had DuPont not changed
the assumption on the expected return in 2010 . (Round your dollar answers to the nearest whole
number.) $ milion What is DuPont's actual gain or loss realized on its 2010 pension plan assets?
(\$ million) (c) What main factors affected DuPont's pension plan assets and pension liability
during 2010? Oinvestment gains and employer contributions increased the plan assets. Service
and interest costs increased the pension liability, and actuarial gains and benefit payments
reduced the liability. Benefits were paid directly by the company and did not affect plan assets
Oinvestment gains and employer contributions increased the plan assets, and benefits paid
reduced plan assets. Service and interest costs increased the pension liability, and actuarial gains
and benefit payments reduced the liability. Olnvestment gains and employer contributions
increased the plan assets, and benefits paid reduced plan assets. Service and interest costs
decreased the pension liability, and actuarial gains and benefit payments reduced the liability.
Olnvestment gains and employer contributions increased the plan assets, and benefits paid
reduced plan assets. Service costs increased the pension liability, and actuaria.
The document is a study guide for a final quiz covering topics from weeks 4 and 5 of a personal finance course. It lists the key objectives, readings, and content areas to study for the quiz, including insurance types and functions, tax planning, filing taxes, investment planning processes, and retirement income needs and sources. The guide is intended to help students prepare and focus their studying on the most important topics that may appear on the final quiz.
Bonds are fixed income securities that promise regular interest payments and repayment of principal at maturity. There are various types including treasury bonds, corporate bonds, and treasury bills. Key bond characteristics include par value, coupon payments, coupon rate, maturity date, and whether it is a floating or zero coupon bond. The bond indenture contract specifies payment terms, collateral, covenants, and other details. Bond valuation considers factors like coupon payments, yield, number of periods, and maturity value. Bond prices are affected by yield to maturity, time to maturity, and coupon size.
The document discusses bonds and their valuation. It begins by outlining key bond characteristics like par value, coupon payments, maturity date, and call provisions. It then explains how to value a bond by discounting its expected cash flows. Specifically, a bond's value is the present value of the coupon payments plus the par value at maturity, discounted at the appropriate interest rate. The value of a bond depends on factors like the coupon rate relative to market interest rates.
The document defines three types of employees in a multi-national company: parent country nationals (PCNs) who are assigned to a foreign subsidiary, host country nationals (HCNs) who work in their home country subsidiary, and third country nationals (TCNs) who are hired in a foreign subsidiary. It provides examples of compensation packages for each type, noting that PCNs and HCNs receive home country-based salaries plus expat allowances and benefits, while TCNs receive local salary and benefits only.
1) Government pension plans like the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) provide retirement benefits that individuals are entitled to if they have lived and contributed in Canada. Benefits can begin between ages 60-70, with reductions for early receipt and increases for delayed receipt.
2) Registered Retirement Savings Plans (RRSPs) allow individuals to shelter retirement savings from taxes. At retirement, RRSPs must be converted to a Registered Retirement Income Fund (RRIF) or other income-generating options like annuities or cash.
3) Retirement income options involve balancing tax implications, longevity risks, and income needs over a potentially long retirement. Professional
1. The document provides a comprehensive financial plan for Mr. Kumar and family, including analysis of their income, expenses, investments, insurance policies, retirement plans, and assets and liabilities.
2. It makes recommendations to sell some existing equity investments and mutual funds to reallocate the portfolio according to ARB's proposed strategy.
3. The plan also analyzes retirement funds, fixed income investments, real estate holdings, tangible assets, and liquid assets to optimize the overall financial plan.
The document discusses pensions in the UK, including the main types: basic state pension, state second pension, occupational pensions, stakeholder pensions, group personal pensions, and personal or individual pensions. It provides details on state pensions, occupational pensions, individual pensions, stakeholder pensions, and group personal pensions. Key aspects like pension contribution calculation, pension tables, and reports are summarized.
This document provides an overview of social insurance programs in the United States, with a focus on Social Security. It begins with definitions of income and income maintenance programs. It then discusses the two major tiers of welfare policy: reducing poverty through social assistance programs, and providing income security through social insurance programs like Social Security. The bulk of the document details Social Security, including its history, components, funding through payroll taxes, benefits provided, impact on poverty rates, and debates around proposed reforms to address projected shortfalls in coming decades.
Mkt#210 lecture 3 entrepreneurial motivation & mobilityKawser Ahmad Sohan
This document discusses theories of motivation and factors influencing entrepreneurship. It describes Maslow's hierarchy of needs and McClelland's theory of three needs - need for affiliation, power, and achievement. The need for achievement is found to dominate in entrepreneurs. Factors influencing entrepreneurial motivation include internal drives and external supports. The document also examines factors influencing occupational and location mobility of entrepreneurs such as education, experience, facilities, and political conditions.
1) The National Pension Scheme (NPS) is India's efficient contribution-based pension system that aims to provide income during old age, safe market returns over the long term, and extend pension coverage to all citizens.
2) All Indian citizens between 18-60 years can invest in NPS through individual accounts or jobs with the central/state governments or corporations. The minimum contribution is Rs. 500 per transaction and Rs. 6,000 annually.
3) Investors can choose between active funds selecting equity, debt, or fixed income allocations, or let their portfolio automatically adjust based on their age through a lifecycle fund option.
Chapter 22_Insurance Companies and Pension FundsRusman Mukhlis
This document summarizes key topics related to insurance companies and pension funds. It discusses the fundamentals of insurance, types of insurance like life and health insurance, and how insurance companies are organized and regulated. It also covers the different types of pension plans like defined benefit and defined contribution, and how pension plans are regulated in the US by acts like ERISA.
This document provides an overview of pension plans in India, including:
1. It defines what a pension is and discusses the advantages of pension plans such as less risk, immediate returns, and tax benefits.
2. It outlines the different types of pension policies including traditional and unit-linked policies and how they differ in terms of investment strategies and returns.
3. It discusses important factors to consider when choosing a pension plan like bonus calculation, life cover, sum assured, and expenses.
The document provides information about pension plans in India. It discusses that PFRDA regulates the pension sector in India and was established in 2003. It then explains what pension plans are, how they provide individuals with a regular income in retirement. It also discusses the history of pension plans shifting from employer-provided to individual plans. Finally, it outlines the key factors to consider to calculate a retirement corpus and describes different types of pension plans and annuity options available.
This document discusses retirement planning and the different phases of retirement. It outlines common reasons people retire such as health, caregiving responsibilities, or job loss. The planning phase involves preparing financially for retirement over 20-30 years and getting personal affairs in order. The adjusting phase entails developing interests outside of work and adjusting to a new lifestyle and schedule. The enjoyment phase is focused on pursuing hobbies, staying active and using discounts. The settling in phase recognizes that some retirees live actively while others struggle with purpose and health issues in retirement.
The document discusses several factors related to entrepreneurial motivation and characteristics. It outlines that locus of control, need for achievement and independence, and willingness to take risks are key motivations. Entrepreneurial characteristics are shaped by one's childhood, education, values, age, work history, role models, and support systems. The document also examines background, motivational, economic, and reward factors that influence entrepreneurship. Finally, it outlines various personal, environmental, financial, and societal barriers that entrepreneurs may face.
The document discusses India's social security system. It defines social security and outlines its key features and objectives. It describes several acts that provide social security benefits like compensation for work-related injuries, medical benefits, maternity benefits, gratuity payments, and pension schemes. However, it notes that social security mostly covers organized sector workers and there is a need for effective implementation. The Unorganized Sector Workers' Social Security Act of 2005 was introduced to extend benefits to informal sector workers as well.
The document discusses social security in India. It defines social security according to the ILO and outlines its key purposes. Social security in India includes preventive, promotional, and protective schemes. Major protective schemes discussed are Employees' State Insurance (ESI), Employees' Provident Fund (EPF), Workmen's Compensation, Payment of Gratuity, and Maternity Benefit. ESI provides healthcare and income support in cases like sickness, injury, unemployment, etc. EPF provides retirement benefits. The document also briefly outlines other schemes like CGHS and those under the National Social Assistance Programme.
1. The document discusses planning and saving for retirement, including estimating costs of one's desired lifestyle and identifying sources of retirement income such as pensions, 401ks, IRAs, Social Security, and other savings vehicles.
2. It explains compound interest and its power to grow savings over time, demonstrating concepts like the Rule of 72.
3. The importance of starting to save and plan for retirement early is emphasized.
The document discusses retirement planning and provides information about retirement benefits. It covers topics such as the importance of retirement planning, sources of retirement income like government and company programs, retirement benefit schemes, and strategies for retirement planning such as maximizing workplace savings and establishing IRAs. The document aims to help people understand retirement and the need for financial planning to ensure a comfortable retirement.
This document discusses social mobilization, which is defined as motivating communities to organize and actively participate in their own development. It involves five main approaches: political mobilization to gain policy commitment, community mobilization to inform local leaders, government mobilization to enlist cooperation, corporate mobilization to gain business support, and beneficiary mobilization to motivate program participants. Key elements of social mobilization include partnership building, community participation through various levels of involvement, using media to raise awareness, and advocacy to mobilize resources and create policy change. The Pantawid Pamilyang Pilipino Program is provided as an example of beneficiary mobilization through its conditional cash transfers.
This document outlines key issues related to accounting for income taxes including differences between book and taxable income, permanent and temporary differences, deferred taxes, components of income tax expense, and required financial statement disclosures. It defines important terms and provides examples of how different tax situations are accounted for including timing differences, deferred tax assets and liabilities, and net operating losses.
I need help with the one indicated in (X).Analyzing and Interpreti.pdfallurafashions98
I need help with the one indicated in (X).
Analyzing and Interpreting Pension Disclosures
Assume E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to
its retirement plans ($ millions).
2010
2009
The following benefit payments, which reflect future service, as appropriate, are expected to be
paid:
Pension Benefits($ millions)20102009Change in benefit obligationBenefit obligation at
beginning of year$ 22,849$ 22,935Service cost383388Interest cost1,2281,192Plan participants'
contributions139Acturarial loss (gain)(728)(244)Benefits paid(1,544)(1,506)Amendments--
(1)Net effects of acquisitions/divestitures576Benefit obligation at end of year$ 22,206$
22,849Change in plan assetsFair value of plan assets at beginning of year$ 22,249$ 20,132Actual
gain on plan assets1,9273,306Employer contributions277280Plan participants'
contributions139Benefits paid(1,544)(1,506)Net effects of acquisitions/divestitures--28Fair value
of plan assets at end of year$ 22,922$ 22,249Funded statusU.S. plans with plan assets$ 2,365$
892Non-U.S. plans with plan assets(90)(317)All other plans(1,559)(1,515)Total$ 716$ (940)
Analyzing and Interpreting Pension Disclosures Assume E.I. Du Pont De Nemours and Co.'s 10-
K report has the following disclosures related to its retirement plans (\$ millions).
The following benefit payments, which reflect future service, as appropriate, are expected to be
paid:
HINT: Do not use negative signs with your answers. (a) How much pension expense (revenue)
does DuPont report in its 2010 income statement? DuPont reports pension of $ million. (b)
DuPont reports a $1,799 million expected return on pension plan assets as an offset to 2010
pension expense. Estimate what the expected return would have been had DuPont not changed
the assumption on the expected return in 2010 . (Round your dollar answers to the nearest whole
number.) $ milion What is DuPont's actual gain or loss realized on its 2010 pension plan assets?
(\$ million) (c) What main factors affected DuPont's pension plan assets and pension liability
during 2010? Oinvestment gains and employer contributions increased the plan assets. Service
and interest costs increased the pension liability, and actuarial gains and benefit payments
reduced the liability. Benefits were paid directly by the company and did not affect plan assets
Oinvestment gains and employer contributions increased the plan assets, and benefits paid
reduced plan assets. Service and interest costs increased the pension liability, and actuarial gains
and benefit payments reduced the liability. Olnvestment gains and employer contributions
increased the plan assets, and benefits paid reduced plan assets. Service and interest costs
decreased the pension liability, and actuarial gains and benefit payments reduced the liability.
Olnvestment gains and employer contributions increased the plan assets, and benefits paid
reduced plan assets. Service costs increased the pension liability, and actuaria.
CH-10 (Q4)FIN550 Week 5 Homework Andrea Bryant 20102014Operating .docxcravennichole326
This document provides quarterly earnings estimates and actual reported earnings per share for the S&P 500 index from Q4 2014 through Q1 2012. It compares bottom-up analyst estimates to top-down model estimates over time. The document notes that bottom-up and top-down estimates have been diverging more recently, with something to watch. It also provides sector-level breakdowns of earnings beats, misses and meets for Q3 2013 reported earnings.
This document discusses employee compensation related to post-employment benefits and share-based compensation. It covers key topics such as defined benefit pension plans, other post-employment benefits, and accounting for stock options and stock grants. The main points are that employee compensation includes post-employment benefits like pensions which require actuarial assumptions and estimates that can impact reported financial performance, and share-based compensation is valued using option pricing models with the expense recognized over the vesting period.
This document discusses financial leverage and various financing alternatives for real estate investments. It defines financial leverage as the relationship between investment return and amount of debt financing. Total leverage compares returns with and without debt, while marginal leverage looks at small amounts of additional debt. The document provides an example analyzing total and marginal leverage for the Willow Brook Apartments project. It then discusses various financing structures like participation loans, sale-leasebacks, interest-only loans, accrual loans, and convertible mortgages. Examples are provided to illustrate how these alternatives could impact investment returns.
The document discusses accounting for pensions and postretirement benefits. It distinguishes between accounting for an employer's pension plan versus a pension fund. It identifies types of pension plans such as defined-benefit and defined-contribution plans. It also explains how to calculate pension expense and amortize gains and losses. Financial statement reporting requirements for pension plans are described. Differences between accounting for pensions versus postretirement healthcare benefits are identified.
Nonprofit Finances - Its Mysteries Revealed4Good.org
An introduction to Board members to understand accounting concepts that are unique to nonprofit organizations so that they can better exercise their fiduciary responsibilities.
This document defines key financial terms related to interest rates, bonds, and capital budgeting. It provides formulas for calculating simple and compound interest, present value, future value, real and nominal interest rates, yield to maturity, net present value, and internal rate of return. Examples are given for coupon bonds, zero-coupon bonds, treasury bonds, and consol bonds. Factors that can shift the supply and demand of bonds and money are also outlined.
North Village Private Equity Case AnalysisJonathan Tsao
The aim of the project was to act on behalf of North Village Capital's Investment Committee and discuss the various financing options of a proposed buyout investment in "AlarmServe."
- Built a LBO Analysis to understand the impact of leverage on the investment
- Ran a covenant stress test using the LBO model to find the appropriate financing structure
- Recommended investment committee to purchase AlarmServe at moderate leverage with potential IRR of 23.4% in five years.
- Received full marks on case analysis
This document provides definitions and explanations of key terms related to preparing a funds flow statement. It defines funds flow as the change in working capital over a period of time. A funds flow statement measures and analyzes the flows of funds, or changes in working capital, between two balance sheet dates. It distinguishes between current and non-current assets and liabilities, as the funds flow statement is based on changes in net working capital (current assets minus current liabilities). The document also notes some of the common sources and uses of funds that would appear in a funds flow statement.
This document provides definitions and explanations of key terms related to preparing a funds flow statement. It defines funds flow as the change in working capital over a period of time. A funds flow statement measures and analyzes the flows of funds, or changes in working capital, between two balance sheet dates. It discusses current assets, current liabilities, and how to calculate the change in net working capital. The document also compares funds flow statements to balance sheets and outlines the general sources and uses of funds.
This document provides an overview of capital structure and leverage. It discusses key concepts such as:
- Business risk versus financial risk and how operating leverage affects business risk
- What determines a firm's optimal capital structure and how this balances higher returns from debt against increased risk
- Different capital structure theories including how taxes, bankruptcy costs, and asymmetric information affect the optimal use of debt
It also provides examples to illustrate how financial leverage can increase expected returns but also increase risk for shareholders. The summary highlights the main factors examined in the document around capital structure choices.
The document discusses various methods for valuing bonds and stocks, including using the time value of money to calculate bond prices based on coupon rates, maturity dates, and yield curves, as well as dividend models and comparable firm multiples to estimate the value of common stock based on factors like earnings, dividends, growth rates, and risk. It also provides examples of applying these valuation techniques and defines related terms.
The document compares accounting for employee benefits under AS 15 and Ind AS 19. It provides details on the recognition, measurement, and presentation of short-term employee benefits, other long-term employee benefits, and post-employment benefits. It also discusses the accounting for defined contribution plans and defined benefit plans, including current service cost, interest cost, past service cost and expected return on plan assets. Ind AS 19 requires more extensive disclosures and includes an appendix on impairment testing of employee benefit assets not found in AS 15.
Pro forma financial statements project a company's future financial performance and position. They include pro forma income statements, balance sheets, and cash flow statements. These statements are used for financial planning, investment analysis, and mergers and acquisitions planning. Creating pro forma statements requires linking the income statement and balance sheet through relationships like changes in retained earnings and interest expense. Forecasting starts with the income statement using percentages of sales, then fills out the balance sheet to ensure it balances. The income statement and balance sheet equations are solved simultaneously to determine financing needs.
The document discusses principles of time value of money, including compound interest, future value, present value, and annuities. It provides examples of calculating future value and present value for single sums with different interest rates and time periods. It also discusses calculating future and present value for annuities, including changing payment amounts, interest rates, and time periods. Additional topics covered include amortized loans, quoted versus effective interest rates, and adjusting calculations for non-annual compounding periods.
This chapter discusses topics related to investment, time, and capital markets. It introduces concepts such as stocks versus flows, present discounted value, the value of bonds, and the net present value criterion for capital investment decisions. It also covers adjustments for risk, including diversifiable and nondiversifiable risk. The capital asset pricing model is presented as a way to measure nondiversifiable risk using an asset's beta. Worked examples demonstrate how to calculate present values, bond yields, and investment project net present values.
This document provides an overview of liabilities, including their definition, classification, and key types. It discusses current and noncurrent liabilities, and covers accounts payable, payroll liabilities, notes payable, bonds, leases, and estimated liabilities. It also introduces concepts of present value and its applications in accounting. International differences in refinanced debt classification and borrowing in foreign currencies are highlighted.
The document discusses accounting for defined benefit pension plans. It explains that defined benefit plans provide employees with a promised retirement benefit based on factors like salary and years of service. This obligates the employer to fund benefits regardless of investment performance. The summary discusses key components of pension expense including service cost, interest cost, expected return on plan assets, and gains/losses. It also mentions the funded status is reported on the balance sheet as a pension asset or liability and disclosures include reconciliation of benefit obligations and plan assets.
2. Key Issues
1. Types of pension plans: defined benefit vs. defined contribution
2. Pension liability: PBO, ABO, VBO
3. Assumptions: discount rate%, salary growth rate%, E(ROA)%, actuarial
4. PENSION assets
5. Primary (ongoing) factors
6. Journal entries
7. Smoothing of transitory gains and losses 12. Corridor amortization
8. Types of transitory gains and losses 13. Pension worksheet
9. Additional factors 14. Footnote disclosures
10. Funded status reconciliation 15. Correction JE
16. OPEB’s
11. Minimum liability
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3. Structure of Pension Plan
firm or employee pension fund retiree
Cash Pay benefits
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4. Types of Pension Plans
1. Defined contribution:
employee bears risk, no firm liability
2. Defined benefit:
firm bears risk and has liability (our focus)
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5. Ex. Defined Benefit Plan
worker’s age = 60
service = 30 yrs so far
retire @ 65 (5 more years)
current salary = $50,000
Pension contract:
X% per year * final salary
(X = # of years of service @ retirement)
Example: 35% x $50,000 = $17,500
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6. Pension Liabilities
Pension liability : discounted PV of expected future cash
payments - like any other non-current liability (effective interest
method).
compare to other non-current liabilities:
r% E(CF)
Bonds known known
Leases known? known
Pensions ? ?
Both discount rate and expected cash flows are subjective
Paul Zarowin 6
7. 3 Definitions of Liabilities
PBO = PV of expected payments, given expected future salaries
ABO= PV of expected payments, given current salaries
VBO =PV of vested portion of expected payments, given current
salaries
PBO ≥ ABO ≥ VBO
Which definition is appropriate for which case?
1. valuing a going concern
2. Takeover
3. Firm in bankruptcy
We’ll use PBO, unless otherwise stated.
Paul Zarowin 7
8. Key Assumptions
discount rate = r% What are
salary growth rate = g% (for PBO) management’s
incentives?
actuarial (life span, tenure, turnover, etc.)
EROA% (expected rate of return on pension assets),
see below
Q: Is liability bigger for older or younger workers?
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9. Ex. Defined Benefit Plan, Continued
Assumptions
Expected salary growth rate = 5%
Discount rate = 10%
Life expectancy = 80 years (15 years in retirement)
Expected final salary = 50,000 * (1.05)5 = 63,814
30% * 63,814 = 19,144 = amount he’ll receive per year in
retirement (based on service so far)
PV of annuity factor, 10%, 15 yrs = 7.606
19,144 * 7.606 = 145,611 = PV @ retirement
PBO = 145,611/(1.10)5 = 90,413 = PV of annuity now
ABO = (30% * 50,000 * 7.606)/1.105 = 70,841
PBO > ABO due to expected salary growth
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10. Primary (Ongoing) Factors Affecting PBO
PBO
- +
DR CR
pay benefits Interest cost
Service cost
def: interest cost = r% * PBO @ beginning of year
(remember: effective interest method)
[debt accretion, like zero coupon bond]
def: service cost = PV of future benefits earned this year
Ex. E14-1, E14-13
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11. Ex. Defined Benefit Plan, Continued
Interest cost = 90413*.10 = 9041
Service cost = (1% * 63,814 * 7.606)/1.105 = 3014
Q: how does a higher or lower r% affect interest cost?
Q: how does an employee’s age affect his service cost?
E14-1,13
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13. Primary (Ongoing) Factors Affecting
Pensions Assets
Assets
+ -
DR CR
Funding (contribution) Pay benefits
(ROA)Return on assets#
# note: this is actual ROA; ROA is shown as +, but could be –
Ex. E14-6, E14-13
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14. Primary Journal Entries
DR CR
service, interest Pension expense PBO
Funding Assets Cash
(contributions)
benefits PBO Assets
ROA Assets(actual Pension Expense
ROA)* (expected ROA= EROA
%*beginning assets)
UNL or UNG
* note: actual ROA is shown as +, but could be –
UNL = unexpected net loss (if actual ROA < expected ROA)
UNG = unexpected net gain (if actual ROA > expected ROA)
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15. Ex. Defined Benefit Plan, Continued
Assume:
pension assets = 100,000
E(ROA)% = 10%
actual ROA = 15,000
DR assets 15,000
CR Pension expense 10,000
CR UNGain 5,000
Q: How does assumed EROA% affect FMV of assets?
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16. Primary Factors Affecting Pension
Expense
Pension Expense
+ -
DR CR
Service E(ROA)
Interest
Q: What is the effect of funding on expense?
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17. Ex. Defined Benefit Plan, Continued
Service 3,014
Interest 9,041
E(ROA) (10,000)
pension expense 2,055
Ex. E14-12 without amortization and unexpected loss
P 14-1, Parts 1-3 in Summary So Far
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18. Smoothing of Transitory Gains and Losses
def: unrecognized = deferred (in footnotes)
def: recognized = amortized (into pension expense on I/S)
Transitory gains, losses are CR’d (gains) or DR’d (losses)
to unrecognized (footnote) accounts, rather than
recognized as gain or loss on I/S. The unrecognized
balances are amortized onto I/S. This smooths NI and
keeps assets and PBO off of B/S.
Full Exp For E14-13
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19. Smoothing (cont’d): Intuition
Loss in DR, Gain in CR
DR CR
Loss: Unrecognized loss Asset or liab.
Amort’n: Exp.(recorded) Unrecognized loss
Gain: Asset or liab. Unrecognized gain
Amort’n: Unrecognized gain Exp.(recorded)
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20. Types of Transitory Gains,
Losses
DR CR
asset gain: actual ROA > expected ROA Assets Pension expense
UNG
asset loss: actual ROA < expected ROA Assets Pension expense
UNL
* assets are DR’d (or CR’d) for actual ROA; pension expense is CR’d for expected ROA;
difference is UNG or UNL (see slide #15)
liability loss (due to ∆ assumption r%, g%, etc.) UNL PBO
liability gain (due to ∆ assumption r%, g%, etc.) PBO UNG
note: asset and liability gains and losses are all aggregated into one UNG/L
account
note: liability gains and losses are also called actuarial gains and losses
Q: What happens if EROA% is set too high (higher than true average
ROA%)? 20
21. 2 Types of Liability Gain/Loss
1. Change in assumptions
2. Change in contracts
Intuition: What affects r% and E(CF)’s
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22. Types of Transitory Gains, Losses
(cont’d)
DR CR
Change in pension contract: sweetening UPSC PBO
Change in pension contract: souring PBO UPSC
def: UPSC = unrecognized prior service cost (retroactive benefits)
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23. Ex. Defined Benefit Plan, Continued
1. assume benefits are sweetened to pay 1.1% * final
salary per year (increased by 10%)
increase in PBO = 10% * 90,413 = 9041
DR UPSC 9041
CR PBO 9041
2. assume salary growth rate is increased to 6% (final
salary = 66,912), so PBO = 94,802 and increase in
PBO = 4389 (94,802 – 90,413)
DR UNLoss 4389
CR PBO 4389
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24. Additional Factors Affecting PBO
PBO
DR (+) CR (-)
Pay benefits Interest cost
Primary factors
Service cost
Liability gain Liability loss (∆ assumptions)
Additional
factors Souring Sweetening (∆ contracts)
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25. Additional Factors Affecting Pension
Expense
Expense
DR (+) CR (-)
Interest cost E(ROA)
Primary factors
Service cost
loss
Additional factors Gain amortization
amortization
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26. Additional Factors Affecting Pension Expense
(cont’d)
Loss amortization:
DR Pension expense
CR UPSC or UNL or UTL
Gain amortization:
DR UPSC or UNG or UTA
CR Pension expense
UTA, UTL = unrecognized transition asset, liability =
net position (assets - PBO) @ adoption of SFAS #87
remember: amortization = recognized into expense
amortization is generally SL over average remaining service life of
employees
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27. Ex. Defined Benefit Plan, Continued
Amortize UPSC over 5 years: 9041/5 = 1808
DR pension expense 1808
CR UPSC 1808
service 3,014
interest 9,041
E(ROA) (10,000)
UPSC Amort. 1,808
pension expense 3,863
Ex. E14-13 GM disclosure
E 14-12 w/o Loss Paul Zarowin 27
28. Funded Status Reconciliation
Reconcile true vs. recognized position
assets
- PBO
funded status (can be net asset or net liability): ‘true position’
+ UNL (or - UNG)
Unrecognized
+ UPSC Gains/Losses
+ UTL (or - UTA)
recognized (on B/S) position: prepaid pension cost (asset) or
deferred pension cost (liab)
note: funded status (true economic position) vs. recognized position
unrecognized losses & liab’s make the recognized position better
than the true position
unrecognized gains & assets make the recognized position worse
than the true position
Ex. E14-14, 19 Paul Zarowin 28
29. Minimum Liability
if ABO > assets the pension plan is considered ‘severely
underfunded’ and a liab. ≥ (ABO - assets) must be
recognized.
if recognized position is asset (prepaid cost) or liab
(accrued cost) < (ABO-assets), additional entry is needed
to bring recognized position to minimum level:
DR Intangible asset*
CR Additional liability
* should be DR to a loss account
additional liab can be shown separately or aggregated with
accrued pension cost on B/S
Ex. E14-2, E14-5 Paul Zarowin 29
30. Corridor (Minimum) Amortization
UNL or UNG must be amortized only if it > “corridor”
corridor = 10% of bigger (PBO, assets) @BOY
amortization is down to corridor, not zero
if amort’n is required one year, it might or might not be the next
year, and vice versa
UNG/L
DR CR
*BOY net loss *BOY net gain (* for current year amort’n test)
Current year loss Current year gain
gain amort’n loss amort’n (amort’n only if required)
#EOY net loss #EOY net gain (# for next year’s amort’n test)
Ex. P14-1, sec 1-6 E14-18 30
31. Pension Worksheet - put it all
together - relate to funded status reconciliation
Recognized (on FS) bal. Unrecognized (footnote) balances
Pen. exp Cash pp’d/acc cost Pen Pen UNGL UPSC
Ass Liab
Service cost DR CR
Interest cost DR CR
ROA CR DR plug
Funding (contribution) CR DR
Benefits CR DR
liability loss6 CR DR
Sweetening7 CR DR
Amortization UNL8 DR CR
Amortization of UPSC
DR CR
(from sweetening)9
Summary JE; only
DR CR CR or DR
recognized (on FS) for a liability gain
6. reverse DR and CR JE 8. reverse DR and CR for amort’n of unrecognized gain
7. reverse DR and CR for souring 9. reverse DR and CR for amort’n from souring
Note: recognized asset/liab (prepaid/accrued pension cost) is net of all unrecognized accounts
33. Footnote Disclosures
The pension footnote includes:
1. total pension expense and its components
2. reconciliation of BOY vs EOY PBO and asset
accounts (like t-accounts)
3. funded status reconciliation
4. assumptions (r%, g%, EROA%)
C 14-2,3
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34. Correction JE
(to put assets and liabs on B/S)
using information in pension footnote, put pension assets and liab
on B/S; replace recognized position with true position
DR CR
pension assets PBO
accrued pension cost or Prepaid pension cost
R/E or R/E
1. put pension assets and PBO on B/S
2. remove accrued or prepaid pension cost from B/S
3. plug: DR or CR R/E = cumulative unrecognized gains/losses (sum
of UNGL, UPSC, UTAL)
note: DR or CR to R/E rather than current year gain or loss
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35. Other Post-Employment Benefits (OPEB’s)
Same accounting as pensions, with minor differences
1. ABO instead of PBO (OPEB’s not tied to salary)
2. significance of (TL) transition liability (no incentive to fund, so
ABO > assets) firms can: amortize TL over <= 20 years
DR OPEB expense
CR Accrued OPEB cost
or take loss as change in accounting principle (below the line):
DR loss due to change in acct principle
CR Accrued OPEB cost
? most firms chose latter: why?
3. service cost is accrued (earned) over short (vesting) period,
since benefits don’t increase with tenure
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