New accounting rules for pensions
New Accounting Rules for Pensions
The Financial Accounting standards Board–FASB issued the new accounting rule SFAS No . 158 , Employers ‘ Accounting for Defined Benefit Pension and Other Postretirement Plans , which was an amendment of the FASB Statements No . 87 , 88 , 106 as well as 132 (R ‘ on September 2006 . The new rule FAS 158 states that all companies are to give information about the net financial status with regard to their postretirement plans on their balance sheet . The rule also states to avoid the smoothing of actuarial gains as well as losses with [banner_entry_middle]
respect to the funding status that moves into the other income section in the shareholders ‘ equity which is considered to be comprehensive (How Will FASB ‘s Accounting Changes Affect Shareholders ‘ Equity and Credit Ratings
SFAS No . 158 informs that an employer who sponsors at least one or more than one single-employer stated benefit plans to as follows (a ) In its statement of financial position , to understand the over-funded or that of the under-funded position with regard to a benefit plan (b ) accept as a part of other comprehensive forms of income , net of the tax , the gains or losses as well as prior service costs or that of credits which evolve during the particular period , but however are not accepted as parts of the net periodic benefit cost which is considerable to SFAS No . 87 which is the Employers ‘ Accounting for Pensions , or that of SFAS No . 106 which is the Employers ‘ Accounting for Postretirement Benefits Other Than Pensions (c ) defined benefit plan assets as well as obligations with regard to the date of the employer ‘s fiscal year-end , and (d inform in the notes with regard to the financial statements more added information regarding particular effects on the net periodic benefit cost for the coming fiscal year that evolve as a result of delay in understanding the gains or the losses , service costs or credits which occur earlier , and the transition asset or that of obligation (Embroidering on Early FAS 158 Boilerplate
Thus it could be stated that SFAS 158 is of the view that companies understand the over-funded or the under-funded position of their stated benefit as well as retiree medical plans as that of an asset or as liability in their year-end balance sheet of 2006 , with alterations in the funded position which is understood by means of comprehensive income in the particular year in which they prevail . SFAS 158 also states measuring the funded position of the companies ‘ plans of the year-end balance sheet at date not beyond 2008 (Quarterly Report : ITEM 2 — Management ‘s Discussion and Analysis of Financial Condition and Results of Operations-Financial Review
SFAS No . 158 is considered to have an influence on the various companies ‘ financial accounting as well as reporting and companies are actually trying to understand the influence of the new rule . Even while understanding the overall impact of SFAS 158 is viewed to be significant , the results vary greatly with respect to each company and also… [banner_entry_footer]
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