Expected Return and Pensions expected, increase, decrease, only

parott

I see the question does increase/decrease in expected return to do Pension accoutning as far as PBO? Funded Status? and Pension Expense?

As far as I know it only changes pension expense becuase the actuarial gain/loss cancels out the change in PBO... Is this correct?

chaojimali

Wouldn't base "depth" on one mock or another. Anything's game. Base it on LOS. You can only test so much per mock.

DSquaredSlim

apologies, the question specifies to ignore income taxes... so there it is

kkn006

i dunno brah, look at 2011 mock afternoon session, Q36; they didn't screw around with the taxes



Edited 1 time(s). Last edit at Wednesday, June 1, 2011 at 09:33PM by magicskyfairy.

Rasec

if the company had employer contributions above economic pension expense if would have been like it paid off a loan, so you would add it back to CFO and subtract it from CFF (as it you were paying off principal on a loan.)

adj CFO = CFO + (economic pension expense - employer contributions)(1-t)

adj CFF = CFF - (economic pension expense - employer contributions)(1-t)

if the company's contributions were less than the expense, they didn't pay contribute enough and CFO should be brought down. Since they didn't pay enough, they essentially used pension accounting to borrow money, so CFF should be adjusted downward for the difference.

random_walker47

not sure, they didn't seem to do that in the mock, so I'm gonna go with no; not because I disagree with you on some fundamentals, just cuz monkey see monkey do



Edited 1 time(s). Last edit at Wednesday, June 1, 2011 at 09:15PM by magicskyfairy.

YAhmed

you need to add (1-t) to this correct?

adjustment to NI under CFO = (pension expense - employer contributions)*(1-t)

because you are reducing a interest-based liability

Swanand

^ wow, wtf is that... screw this section, right in its face

RepoToronto

Its not somewhere, its in Pension accounting adjustments to Cash flow section. lol.

wizofoz

Magic, I remember reading somewhere saying if economic expense > contribution, it is like borrowing money so you need to move (economic expense-contribution)*(1-t) from CFO to CFF. Company treats reported pension expense as CFO. Not sure if this makes sense.



Edited 1 time(s). Last edit at Wednesday, June 1, 2011 at 03:44PM by madamesoleil.