TAILIEUCHUNG - Lecture Intermediate accounting (Volume 2, 11th Canadian edition) – Chapter Appendix 19: Pensions and other post-employment benefits

After studying this chapter, you should be able to explain and apply basic calculations to determine current service cost, the defined benefit obligation, and past service cost for a one-person defined benefit pension plan. | 1 CHAPTER 19: PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS 2 2 CHAPTER 19: Pensions and Other Post-Employment Benefits After studying Appendix 19A, you should be able to: 11. Explain and apply basic calculations to determine current service cost, the defined benefit obligation, and past service cost for a one-person defined benefit pension plan. 3 LO12 Apply the temporary difference approach (future income taxes method) of accounting for income taxes in a comprehensive situation. 3 HTSM Corp. Example 4 4 HTSM Corp. Example Lee Sung: Age 30 Employment date January 1, 2016 Starting salary $37,500 Expected to work for 35 years Retirement date December 31, 2050 (Age 65) Expected annual salary increase of 4% (approx.) Expected salary at retirement $150,000 Life expectancy at December 31, 2050 is 12 years 5 LO11 Explain and apply basic calculations to determine current service cost, the defined benefit obligation, and past service cost for a one-person defined benefit pension plan. 5 HTSM Corp. Example Period of Employment Jan 1, 2016 Dec 31, 2050 Dec 31, 2062 35 years 12 years Retirement Period 6 LO11 Explain and apply basic calculations to determine current service cost, the defined benefit obligation, and past service cost for a one-person defined benefit pension plan. 6 HTSM Corp. Example The Pension Plan Defined benefit plan Annual pension benefits on retirement 2% of salary at retirement for each year of service, or 2% x final salary x years of service Discount rate = 6% 7 LO11 Explain and apply basic calculations to determine current service cost, the defined benefit obligation, and past service cost for a one-person defined benefit pension plan. 7 HTSM Corp. Example Current Service Cost – 2016 Annual benefit on retirement earned in 2016: 2% x $150,000 x 1 year of service = $3,000 This annuity must be discounted to determine the cost in 2016 First discount back to the retirement date of 2050 then discount back to 2016 8 LO11 Explain and apply basic calculations to

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• Intermediate accounting
• Lecture Intermediate accounting
• Financial reporting
• Post employment benefits
• Benefit plans
• Pension plans
• Financial Accounting
• Accounting process
• Accounting equation
• Accounting processing cycle
• Stock issuance
• Estimating reserves
• Liquidating dividends
• Accounting changes
• Error corrections
• Accounting choices
• Theoretical structure
• Accrual accounting
• Financial accounting environment
• Accounting for leases
• Leasing environment
• Accounting by lessee
• Special accounting problems
• Cash versus accrual accounting
• International standard setting
• Accounting standards
• Accounting assists
• The challenges facing accounting
• Income taxes
• Accounting for income taxes
• Deferred tax liabilities
• Error analysis
• Accounting policy
• Accounting estimate
• Accounting policies
• Accounting information system
• Measurement issues
• Characteristics of accounting
• Capital allocation process