Intermediate Accounting: IFRS Edition, 2nd Edition

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. 1 Distinguish between accounting for the employer's pension plan and accounting for the pension fund.
2. 2 Identify types of pension plans and their characteristics.
3. 3 Explain measures for valuing the pension obligation.
4. 4 Identify amounts reported in financial statements.
5. 5 Use a worksheet for employer's pension plan entries.
6. 6 Explain the accounting for past service costs.
7. 7 Explain the accounting for remeasurements.
8. 8 Describe the requirements for reporting pension plans in financial statements.
9. 9 Explain the accounting for other postretirement benefits.

Pension Peril

The effects of the financial crisis of 2008 and the resultant economic downturn continue to ripple through global markets. Pension plans, both those sponsored by governments and private companies, are now feeling the effects. Consider the following actions by private companies to deal with the effects of the financial crisis.

• Britain's employers are shutting down pension schemes at a rapid rate. A new study has concluded that traditional final salary pension benefits will soon become a thing of the past. The study found that total service cost—the cost of providing the current year's pension promises—had fallen by 15 percent as a result of the shutdown. The drop reflects a decline in the number of workers who are earning pension benefits. ...