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Chapter 20: Question 28Q (page 1161)

What are the major differences between postretirement healthcare benefits and pension benefits?

Short Answer

Expert verified

A single-life pension plan is the type of plan offered by an organization to its employees where the amount of pension will be payable to an employee until their death.

Step by step solution

01

Introduction

The following terms, pension benefits and post-retirement healthcare benefits, are significantly different in various terminologies. Some of the main differences are as below.

02

Differentiating between the post-retirement healthcare benefits and pension benefits

Basis

Pension benefits

Postretirement healthcare benefits

Meaning

These types of benefits are offered other than the pension to the employees.

These benefits are related to the pension plan taken by an employee.

Service years

Related to the number of years of service.

Not related to the years of service.

Costs

Paid by the employer

Paid by both employer and employee

Other benefits

Provides vesting benefits

Does not provide vesting benefits

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Most popular questions from this chapter

Taveras Enterprises provides the following information relative to its defined benefit pension plan. Balances or Values at December 31, 2017 Projected benefit obligation \(2,737,000 Accumulated benefit obligation 1,980,000 Fair value of plan assets 2,278,329 Accumulated OCI (PSC) 210,000 Accumulated OCIโ€”Net loss (1/1/17 balance, โ€“0โ€“) 45,680 Pension liability 458,671 Other pension plan data for 2017: Service cost 94,000 Prior service cost amortization 42,000 Actual return on plan assets 130,000 Expected return on plan assets 175,680 Interest on January 1, 2017, projected benefi t obligation 253,000 Contributions to plan 93,329 Benefi ts paid 140,000

Instructions (a) Prepare the note disclosing the components of pension expense for the year 2017. (b) Determine the amounts of other comprehensive income and comprehensive income for 2017. Net income for 2017 is \)35,000. (c) Compute the amount of accumulated other comprehensive income reported at December 31, 2017.

At the end of the current year, Joshua Co. has a defined benefit obligation of \(335,000 and pension plan assets with a fair value of \)345,000. The amount of the vested benefits for the plan is \(225,000. Joshua has a liability gain of \)8,300 (beginning accumulated OCI is zero). What amount and account(s) related to its pension plan will be reported on the companyโ€™s statement of financial position?

The following items appear on Brueggen Companyโ€™s financial statements. 1. Under the caption Assets: Pension asset/liability. 2. Under the caption Liabilities: Pension asset/liability. 3. Under the caption Stockholdersโ€™ Equity: Prior service cost as a component of Accumulated Other Comprehensive Income. 4. On the income statement: Pension expense. Instructions Explain the significance of each of the items above on corporate financial statements. (Note: All items set forth above are not necessarily to be found on the statements of a single company.)

At December 31, 2017, Besler Corporation had a projected benefit obligation of \(560,000, plan assets of \)322,000, and prior service cost of $127,000 in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2017.

What are โ€œliability gains and losses,โ€ and how are they accounted for?

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