ACC541 ACC/541 DQs Week 5 - 19460

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Pension accounting has become more closely associated with the method of determining pension benefits.

 

 

Required:

 

(1)

 

a. Discuss the following methods of determining pension benefi ts:

 

i. Defined contribution plan

 

ii. Defined benefi t plan

 

b. Discuss the following actuarial funding methods:

 

i. Cost approach

 

ii. Benefit approach

 

 

(2)

 

What type of pension plan do you have?  If you do not have one, what are some of your plans for the future to put something in place for the future?  Do you know of a situation where a family member / friend were cheated out of their pension in some way?  If you do, please share that information.

 

(3)

 

There is a lot of information about social security - it is bankrupt or it is financially strong.  Why do you believe?   How does social security affect your retirement future?

A central issue in reporting on industry segments of a business enterprise is the determination of which segments are reportable.

 

(1)

 

Required:

 

a. What is a reportable segment?

 

b. Explain how a preparer would determine which operating segments to report segment information for.

 

c. What types of segment information must be reported?  Do not list a lot of information.  Identify no more than 3 key items.

 

(2)

 

Research a Fortune 500 company and identify its segments.  Include the URL where you found the information form.

Penny Pincher Company has a defi ned benefi t pension plan for its employees. The following pension data are available at year end (in millions):

 

           Accumulated benefit obligation   $142

           Projected benefit obligation          205

           Fair value of plan assets              175

 

There is no balance in prepaid/accrued pension costs.

 

Required:

 

a. Calculate the funded status of the plan (see ASC (formerly SFAS No. 158) for a definition of funded status). Is the plan overfunded or underfunded?

 

b. If the projected benefi t obligation provides the appropriate measure of the company’s obligation for pension benefi ts and the assets in the fund are viewed as satisfying all or part of that obligation, what is Penny Pincher’s liability, if any, for the pension plan at year-end? Explain, citing the Conceptual Framework’s definition of liabilities (do not forget about Conceptual Framework 8 - posted as an Article Link in Week 1) in your explanation.

 

c. What amount will Penny Pincher have to report in its balance sheet? Is it an asset or liability?

Solution Description

a. Discuss the following methods of determining pension benefi ts:

 

i. Defined contribution plan: under defined contribution plan employers agree to match the employees' contributions to the pension plan but under this plan the benefits are not gua

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