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  1. Defined Contribution Plan
    work, exp, pay after retire
  2. Defined Benefit Plan
    estimate, exp, pay after retire
  3. Pensions
    3 Entities Involved
    • Employer
    • Pension Fund
    • Retired Employees
  4. Employer
    • Pension expense
    • Cash

    Liability transfers to pension fund
  5. Pension Fund
    • Assets: FV of Plan Asset
    • Obligation: Projected Benefits Obligation
    • A seperate legal and accounting entity

    handles investing contributions and paying retirees their benefits
  6. Balance Sheet
    • Projected Benefits Obligation
    • - Fair Value of Plan Assets
    • = Over or Under funded status of the Plan to be reported on the company balance sheet
  7. Vested
  8. VBO
    • Vested Benefit Obligation
    • Employees: vested
    • Based on salary level: current
  9. ABO
    • Accumulated Benefit Obligation
    • Employees: vested and non-vested
    • Based on salary level: current
  10. PBO
    • Projected Benefit Obligation
    • Employees: vested and non-vested
    • Based on salary level: future
  11. Pension Worksheet
    2 Parts
    • General Journal Entries
    • Memo Record
  12. Pension Worksheet
    General Journal Entries-5
    • Annual Pension Expense
    • Cash
    • PSC (OCI)
    • Gain/Losses (OCI)
    • Pension Asset/Liability
  13. Pension Worksheet
    Memo Record-2
    • PBO
    • Plan Asset
  14. Components of Pension Expense
    Service Cost
  15. Service Cost
    what is it?
    Increase in pesion because of services rendered during the current year. Recorded at prresent value using the settlement rate
  16. Service Cost
    Journal Entry
    • Dr. Pension Expense
    • Cr. Projected Benefits Obligation
  17. Interest cost
    Interest Expense on existing liability due to passing of time. Based on the Pension Fund's liability (PBO) times the settlement rate
Card Set:
2014-11-24 06:58:29
Accounting 302

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