Postretirement Benefit Cost - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented.
Post-Retirement Benefit Expense
Formal or informal, giving post-retirement benefits to your workers costs you money. Post-retirement benefit expense refers to the cost of pension recognizable for the period. There are several components in computing for post-retirement benefit expense, but they depend on the type of plan established by your company. These plans can either be a defined contribution plan or a defined benefit plan.
A defined contribution plan calls for fixed contributions. You and your employees contribute into a separate fund. Your contribution to the retirement fund will be the post-retirement benefit expense.
A defined benefit plan aims to provide agreed benefits to your employees. It guarantees that your workers will receive a specific amount of benefits. They depend on the salary upon retirement and the corresponding years in service. As such, the defined benefit expense is comprised of several components.
UNDER INTERNATIONAL FINANCIAL REPORTING STANDARD-
IAS 26 Accounting and Reporting by Retirement Benefit Plans outlines the requirements for the preparation of financial statements of retirement benefit plans. It outlines the financial statements required and discusses the measurement of various line items, particularly the actuarial present value of promised retirement benefits for defined benefit plans.
Summary of IAS 26 - INTERNATIONAL FINANCIAL REPORTING STANDARD
The objective of IAS 26 is to specify measurement and disclosure principles for the reports of retirement benefit plans. All plans should include in their reports a statement of changes in net assets available for benefits, a summary of significant accounting policies and a description of the plan and the effect of any changes in the plan during the period.
Key definitions
Retirement benefit plan: An arrangement by which an entity provides benefits (annual income or lump sum) to employees after they terminate from service. [IAS 26.8]
Defined contribution plan: A retirement benefit plan by which benefits to employees are based on the amount of funds contributed to the plan plus investment earnings thereon. [IAS 26.8]
Defined benefit plan: A retirement benefit plan by which employees receive benefits based on a formula usually linked to employee earnings. [IAS 26.8]
Defined contribution plans
The report of a defined contribution plan should contain a statement of net assets available for benefits and a description of the funding policy. [IAS 26.13]
Defined benefit plans
The report of a defined benefit plan should contain either: [IAS 26.17]
If an actuarial valuation has not been prepared at the date of the report of a defined benefit plan, the most recent valuation should be used as a base and the date of the valuation disclosed. The actuarial present value of promised retirement benefits should be based on the benefits promised under the terms of the plan on service rendered to date, using either current salary levels or projected salary levels, with disclosure of the basis used. The effect of any changes in actuarial assumptions that have had a significant effect on the actuarial present value of promised retirement benefits should also be disclosed. [IAS 26.18]
The report should explain the relationship between the actuarial present value of promised retirement benefits and the net assets available for benefits, and the policy for the funding of promised benefits. [IAS 26.19]
Retirement benefit plan investments should be carried at fair value. For marketable securities, fair value means market value. If fair values cannot be estimated for certain retirement benefit plan investments, disclosure should be made of the reason why fair value is not used. [IAS 26.32]
Postretirement Benefit Cost - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING...
Postretirement Benefit Cost - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented.
Defined Benefit Plan - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented
-Comprehensive Income- present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented. -Restrictions of Retained Earnings- present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented -Comprehensive Income- provide the definition given by the GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) and the definition given by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) -Restrictions of Retained...
-Full disclosure principle - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented. -Related parties - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented
Financial Liquidity - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented.
Financial liquidity - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented.
Carry forward- present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented.
Aggregation of Pension Plans - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented.
Aggregation of Pension Plans - present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented
*Choose one of the main differences between generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS). *Fully explain the selected difference. *In addition, discuss how that difference impacts financial reporting. *Lastly, discuss which standard you think is more appropriate to apply to financial accounting and why.