Accounting for Postretirement Health Care and Life Insurance Benefits necessitates disclosures regarding an employer's accounting. These include a delineation of the provision of benefits and the groups of employees given coverage, a delineation of the employer's prevailing accounting and financing policies for such benefits and lastly the cost of such benefits acknowledged for the period. In particular, this is effective for the financial statements prepared by organizations for the financial period ending subsequent to December 15, 1984 with respect to postretirement health care and life insurance benefits that are provided not only in the United States but also international nations. Nonetheless, for financial periods prior to June 15, 1985 that lack data and information regarding benefits provided in foreign nations, it is not mandatory to include them (FASB, 2017).Moreover, the net pension liability or net pension assets have to be included in the financial statements as an asset or liability respectively. Any changes in this asset or liability that are yet to be included in the income reported have to be included in other comprehensive income. In the case of pensions, imperatively, the retirement benefits are a fixed amount in general with regard to the terms set for a contract, with the period or term not predetermined. In addition, it is more challenging and harder to make an estimation of the benefits of healthcare plans owing to the fact that the term is...
87 indicates the differences between prevailing and past accounting practices for pensions. The most substantial changes to previous practice have an impact on employer's accounting for a single-employer well-defined benefit pension plan, even though some provisions are also applicable to an employer that takes part in a multiemployer plan or sponsors a defined contribution plan. A major change is the transition from cash accounting to accrual accounting. The FASB in 1966 came to the conclusion that aspects such as cash that influence decisions in funding ought not to be permitted to influence accounting outcomes. In the application of accrual accounting to pensions, only three important elements of past pension accounting are maintained. These include reporting net cost, delaying recognition of particular events, and offsetting liabilities and assets (FASB, 2017).
By operating separate trusts for certain benefits, companies operating under GAAP can often greatly reduce their pension liability (Kossov 2010). Pension funds must then be sued only for the payment of retirement benefits (and the earning of interest), then, rather than being combined with other benefit programs funded or operated by the company as they often are now (Kossov 2010). It is in the area of pension assets, however, that
Accounting forms the overall backbone of the financial world. Financial markets are predicated on consumer and user confidence. Without confidence, consumers attempting to make financial decisions will be doing so using inaccurate and incomplete information. The lack of transparency regarding the truthfulness of reported numbers creates uncertainty within the capital markets. This uncertainty regarding the accuracy of information ultimately undermines the overall financial system, causing harm to society in the
Accounting Principles To expressly explain the similarities and differences that exist between the GASB and FASB accounting standards it is imperative that we first examine the philosophical approaches that the boards have taken (Marsh & Fischer, 2011). These are found in the board's concept statements. The boards use the concept statements to develop accounting standards. The FASB conceptual framework focuses on provision of best information that influences decisions made by creditors,
Given this situation then, it is required that any modification in stocks be operated in the financial statements as well. As such, when an executive resigns and forfeits on his stock before vesting, the financial statements will reflect this situation. On the one hand, the stocks would be registered as new equity. On the other hand, they would be presented to the other stakeholders -- already existent ones or new
However, the application of the 3% independent ownership has been restructured to make SPEs much clearer to delineate between parent company ownership and independent ownership. Another major issue that arose out of the Enron scandal is the manipulation used by Anderson of derivatives. In a BBC report, Emma Clark explains, "If you dig deep enough into any financial scandal you can usually find a derivative or two to take the
Accounting Fundamentals for Healthcare Management This paper examines governmental and nonprofit accounting and discusses how it differs from commercial accounting. In the accounting field, there may not always be a clear distinction between the three types of organizations. The dividing line between business and nonbusiness organizations may depend on the incidence and relative importance of the nonbusiness characteristics found in an entity. The funds of such organizations are usually earmarked for
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