标题: Economic Pension Expense Hint [打印本页] 作者: laurab 时间: 2011-7-13 14:24 标题: Economic Pension Expense Hint
I couldn't remember the economic pension expense formula to save my life. Somehow, looking at different EOCs, etc. I was able to derive a much simpler formula:
Economic Pension Expense = Contributions - (Change in Plan Assets - Change in PBO) = Contributions - Excess Contributions
So far it has worked wonders. Hadn't seen it in my reviews so decided to share. Hope it helps.作者: redskins44 时间: 2011-7-13 14:24
Yep, believe the way it is outlined in Schweser is:
Change in funded status - Firm Contributions = Economic Pension Expense作者: stalkey 时间: 2011-7-13 14:24
economic pension expense = change in funded status - contribution作者: mp3bu 时间: 2011-7-13 14:24
know the full length way too... you never know what presentation CFAI is going to hit you with作者: DSquaredSlim 时间: 2011-7-13 14:24
Is the full-length way essentially PBO (don't include benefits paid) minus actual return on assets?
Edited 1 time(s). Last edit at Sunday, May 29, 2011 at 11:29PM by daveyc18.作者: comp_sci_kid 时间: 2011-7-13 14:24
Essentially, yes. Pick off all the costs that hit the PBO and subtract the actual return in plan assets. Note, sometimes CFAI is sneaky and the actual return is negative.
daveyc18 Wrote:
-------------------------------------------------------
> Is the full-length way essentially PBO (don't
> include benefits paid) minus actual return on
> assets?作者: CPATrader 时间: 2011-7-13 14:24
daveyc18 Wrote:
-------------------------------------------------------
> Is the full-length way essentially PBO (don't
> include benefits paid) minus actual return on
> assets?
Yes. That's the other way to do it.作者: madaochenggong 时间: 2011-7-13 14:24
One thing that's confusing me is that in Schweser's notes amortization of actuarial loss is under "pension expense," but it's omitted in PBO, where it should be included, too, right?作者: Otabek 时间: 2011-7-13 14:24
Yes, Actuarial g/l are part of PBO.作者: giorgio10 时间: 2011-7-13 14:25
Actuarial Gains and Losses and Plan Amendments are always included in PBO, in their total amount.
However, they are not recognized in the I/S immediately. Instead, they go directly into OCI.
Deferred Gains/Losses in OCI = Actuarial Gains/Losses + Difference between Expected Return and Actual Return on Assets
When the accumulated value of Deferred Gains/Losses in OCI exceeds the 'corridor' (=10%*max(PBO, PA)), you must amortize the excess over the corridor, over the remaining life of the plan. This amortization amount shows up as your "amortization of deferred gains/losses" in pension expense.
Plan Amendments also go into OCI, and this shows up as "amortization of prior service costs" in your pension expense calculation.
Note: under IFRS, any prior service costs that have been vested go directly into the I/S.
So remember: PBO is your OBLIGATION - it has to include the total impact of any plan amendments or changes in actuarial assumptions. But Pension expense is your PERIODIC expense - so that is why you only include amortization of these amounts (in an attempt to "smooth" pension expense and reduce volatility).
Also, under GAAP, the net pension A/L on the B/S is simply the funded status (PA - PBO). Under IFRS, the net pension A/L on the B/S is the funded status +/- adjustments for any UNrecognized costs in OCI.
