Under current U.S. GAAP, the assets and liabilities of a defined benefit pension plan are: A) netted against each other, and only the net asset or liability amount is reported on the company’s balance sheet. B) reported in the appropriate section of the balance sheet, with pension obligations shown under liabilities and plan assets shown under assets. C) off balance sheet items which are shown only in the footnotes
A) netted against each other, and only the net asset or liability amount is reported on the company’s balance sheet. a.k.a funded status.
Has to be A
A
Check this dudes notes out http://www.usfca.edu/economics/veitch/ECON%20720%20Equity%20Valuation/ECON%20720%20-%20Pension%20Fund%20Accounting.ppt
A for sure
Your answer: A was correct! Under current U.S. GAAP, companies are required to report only the net asset or liability amount. They cannot show assets and liabilities separately. Although some smoothing details are still disclosed in the footnotes, all major components of pension assets and liabilities are now required to be shown on the balance sheet. see their explanation. Although some smoothing details are still disclosed in the footnotes, all major components of pension assets and liabilities are now required to be shown on the balance sheet. what does it mean…
It means that Under IFRS Net assets (Liability) amt is adjusted for un-recognized items. Therefore you get less volatility in the reported net asset or in other words : smoothing!
But now you have to do smoothing before entering any amount is your BS? Don’t use US GAAP longer? I hate CFAI