International Financial Statement Analysis Workbook, 3rd Edition

CHAPTER 14 EMPLOYEE COMPENSATION: POST-EMPLOYMENT AND SHARE-BASED

LEARNING OUTCOMES

After completing this chapter, you will be able to do the following:

• describe the types of post-employment benefit plans and implications for financial reports;
• explain and calculate measures of a defined benefit pension obligation (i.e., present value of the defined benefit obligation and projected benefit obligation) and net pension liability (or asset);
• describe the components of a company's defined benefit pension costs;
• explain and calculate the effect of a defined benefit plan's assumptions on the defined benefit obligation and periodic pension cost;
• explain and calculate how adjusting for items of pension and other post-employment benefits that are reported in the notes to the financial statements affects financial statements and ratios;
• interpret pension plan note disclosures including cash flow related information;
• explain issues associated with accounting for share-based compensation;
• explain how accounting for stock grants and stock options affects financial statements, and the importance of companies' assumptions in valuing these grants and options.

SUMMARY OVERVIEW

• Defined contribution pension plans specify (define) only the amount of contribution to the plan; the eventual amount of the pension benefit to the employee will depend on the value of an employee's plan assets at the time of retirement.
• Balance sheet reporting is less analytically relevant for defined contribution ...