Assignment 3 Accounting for Pensions and other Post Retirement Benefits

1551 WordsJan 26, 20157 Pages
Assignment 3: Accounting for Pensions and other Post-Retirement Benefits ACC 563 – Advanced Accounting Theory Abstract This paper will be based research, compare and contrast the early historical accounting for Postretirement Health Care and Life Insurance Benefits with the guidance / rules in place today with the Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards No. 158 "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans; changes to the guidance and rules that would improve the financial accounting and reporting of the benefits. Predict the significant manner in which the future of accounting for these benefits could…show more content…
The Postretirement Health Care and Life Insurance Benefits changes do not improve verifiability. The Postretirement Health Care and Life Insurance Benefits estimated long term returns and estimated future service lives of workforce used to book amounts into other Income. Political climate change, Political philosophy say that it would not increase or decrease. Political philosophy think that when you are not sure, select the option that minimizes profits and assets. This would have been more conservative if only underfunded plans were book to liabilities and overfunded plans were just reported in documents but no asset booked. Given the extensive assumptions, the certainty of future benefits is not very high. Overfunded plans can turn too underfunded with one deep plunge of the stock market, as happened in fall 2008. According to www.nrln.org an good example, General Motors used pension assets to pay for nearly $3 billion in lump sum severance payouts during 2008 and ended up with such a dangerous degree of under-funding that in early 2009 the Treasury Department restricted the practice as a condition of the federal bailout loan package. In 2012 it terminated its plan for management and salaried retirees entirely. (www.nrln.org) Postretirement Health Care and Life Insurance Benefits Scenario Postretirement Health Care and Life Insurance Benefits change like fall 2008, the potential impact of these changes on financial accounting and reporting practices.
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