PBO

PBO (beg of year) +Service cost +Interest cost +/- Actuarial gains and losses +/- Prior service cost - Benefits paid _____________ =PBO (end of year) Does this hold for both the old and new standard? If so under the new standard are and actuarial gain/losses or prior service cost recognize in the year of the change?

yes and they are both amortized…

Would be more accurate to say +/- actuarial losses / gains You add losses.

Under IFS, Prior Service Cost for retired and vested employees is expensed in the period incurred vs. amortized.

isn’t there another difference between IFS and GAAP, where one is amortized during employees life, vs the until retirment? or I pulling this out of nowhere?

I think it is amortized during emp life vs. expense now…

I am confused now. If what I wrote above holds for both standards how is the balance sheet going to be different under the new standard?

Wait - doesn’t GAAP amortize over emp. life but IAS over time of employment?

mwvt9 Wrote: ------------------------------------------------------- > I am confused now. > > If what I wrote above holds for both standards how > is the balance sheet going to be different under > the new standard? I’m freakin…someone help :wink:

us gaap is old so till life of employee

IFRS Differences - Actuarial gains and losses amortized over employee’s service life, not life expectany… - Prior service costs for retired participants and current employees vested expensed in period incurred… - does not require a minimum liability… -Balance Sheet pension liability reflects funded status adj. for unrecognized items…

the PBO’s components are the same for both standards. it’s the way prior service cost and actuarial g/l are calculated that differs under the new rules (US GAAP), pension liability/asset is the funded status. THAT’S IT

So am I correct in saying the the PBO formula is the same…so the true PBO is the same but under the old standards (and IAS) some of that PBO is held off balance sheet and amortized in over time?

mwvt9 Wrote: ------------------------------------------------------- > So am I correct in saying the the PBO formula is > the same…so the true PBO is the same but under > the old standards (and IAS) some of that PBO is > held off balance sheet and amortized in over time? i wouldn’t think of it as “some of the PBO”. just think of it as prior service cost and actuarial g/l

I just looked over this again. I don’t know what the hell is wrong with me. I am questioning everything I know. Thanks for the help though.

ok, under the old standard: pension asset/liability reported on BS = FV - PBO and then the effects of prior service cost/benefit and actuarial g/l reversed. so you added back losses and subtracted gains. funded status was recorded in the footnotes only new standard: pension asset/liability on BS = FV - PBO = funded status and that’s it.