if economic pension expense > employer contribution, the difference net of taxes is reclassified from CFO to CFF? so CFO is reduced and CFF increases?作者: jarobi04 时间: 2011-7-13 16:03
Yes. If EPE > contributions, its as if the plan is borrowing money, which would increase CFF. If EPE< contributions, its as if debt is being paid down, which reduces CFF.作者: ryanlb 时间: 2011-7-13 16:03
thanks spanish. another adjustment is to income. only service cost is added to operating income. interest cost is added to interest expense, and actual return on plan assets are added to other non operating income. am i missing anything else?作者: zephyranalyst 时间: 2011-7-13 16:03
theCFAway Wrote:
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> thanks spanish. another adjustment is to income.
> only service cost is added to operating income.
> interest cost is added to interest expense, and
> actual return on plan assets are added to other
> non operating income. am i missing anything else?
adjust ment to cashflow with indirect method to reflect true economic position:
adjustments to reported cashflow: add back reported pension expense less contribution from employer
adjustment to reported NI: (add back reported pension expense less economic pension expense) X (1 - tax rate)作者: ap0258 时间: 2011-7-13 16:03
theCFAway Wrote:
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> just to clarify-
>
> if economic pension expense > employer
> contribution, the difference net of taxes is
> reclassified from CFO to CFF? so CFO is reduced
> and CFF increases?
Correct but drop "net of taxes" in the above.作者: profil 时间: 2011-7-13 16:03
well schweser does read net of taxes .. care to explain dreary ? please .. thanks 作者: SpyAli 时间: 2011-7-13 16:03
Dreary - I agree with all your calcs. However, you need to multiply the adjustments above by (1-T) so you can get the after-tax effect. Why after tax effect?
Because in a scenario, for example, where contribution > EPE, you are paying down principal. Interest expense is tax deductible.作者: kickthatcfa 时间: 2011-7-13 16:03
...my head is still spinning from these adjustments...I just have to commit to memory.
