Learn about the new Section , issued by the Accounting Standards Board in September to replace Section Employee Future Benefits, which will replace Section in Part II of the CICA Handbook. The final version is consistent with the Exposure. Does anyone have an example similar to the illustrative examples of that actually use immediate recognition? The examples continue to.
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CICA Immediate recognition – Actuarial Outpost
The nature and effect of each significant non-routine event occurring during the period such as a plan amendment, curtailment or settlement, or business combination or divestiture. We should equip them with standards that are as current as possible.
The final standard includes a recommendation that interest earned on any unallocated plan surplus which might arise if a defined benefit plan is converted to a defined contribution plan should reduce the benefit expense for the period. This section has been reorganized, now starting with a reminder about Section requirements 4361 disclose the methods used when choices are provided.
These requirements remove the choice of classification because choice reduces the comparability of financial statements. The amount recognized on the balance sheet as an accrued benefit liability or asset, the expense for the period, the employer and employee contributions during the period, and the amount of benefits paid.
Additional information or clarification provided Finalized Section goes into more detail than the Exposure Draft in its discussion of cash and cash equivalents. The total plan obligation, the fair value of plan assets, and cjca resulting surplus or deficit.
This may differ depending on the circumstance.
Many intermediate accounting students are one to two years from graduation The climate in the existing Accounting Standards Board is to eliminate major differences between the Canadian and Cca standards wherever there is not a convincing reason for a difference.
Here our authors will speak to you directly and provide you with updates on current accounting issues, ciac in the discipline, teaching trends, tips on using the book. While the Exposure Draft material related to pensions and other employee future benefits is not finalized, it is anticipated that in all major respects, the ED changes will be made to bring the standard in line with the U.
The basic set includes:. The nature and effect of each significant change during the period affecting the comparability of the expense reported, such as a change in the rate of employer contributions, a business combination or divestiture. The unamortized amounts remaining, separately disclosing the unamortized past service costs, the unamortized net actuarial gain or loss, and the unamortized transitional obligation or asset, as well as the amount of amortization for the period for each.
As expected, there are few changes of any significance. Information about securities of the entity and related parties included in plan assets, and about transactions between the plan and the entity during the period. Not effective until the year ? Dividends and interest paid and charged to retained earnings should be presented separately as cash flows used in financing activities.
Sectionunlike the Exposure Draft and old Sectionrecognizes the existence of employee contributions. The final standard looks different from the Exposure Draft — it is much better organized, is internally consistent, is easier to read, and has a useful glossary of defined terms before the appendices of examples.
Section clarifies that when the costs of special or contractual termination benefits, or gains or losses from settlements and curtailments relate directly to a discontinued operation or a disposal of a portion of a business segment, they should be included in the gain or loss from discontinued operations or the gain or loss on disposal of that portion of a business segment, as appropriate.
In Section as before, fair value is used to determine the plan surplus or deficit. This does not materially change the coverage in Chapter This does not change the calculations in Chapter 20 because fair value and market-related value were assumed to be equal. Transitional changes were not addressed in Chapter EARSL, or the expected average remaining service life of the employee group is no longer used, nor is it a defined term.
Dividend payments are classified in this material as operating outflows, whereas revised Section requires that they be financing outflows.
Section 3462, Employee future benefits: September 2013 update: Financial reporting alert
Based on risk and return criteria, we must move forward. It is effective for fiscal years beginning on or after January 1,however, earlier adoption is being encouraged. This note explains a specific requirement that was changed in the final standard, affecting the text material in Chapter 23, and describes areas where the final document provides for additional information or clarification.
Many cicz Canadian companies, particularly those with reporting requirements in the U. Securities and loans “held for trading purposes,” terminology based originally on U. Unlike the Exposure Draftthe final standard provides for two levels of disclosure for defined benefit plans: The decision was made to incorporate the Income Tax Exposure Draft recommendations subsequently cuca for minor changes between the ED and the final Handbook section in Chapter 19 and the Exposure Draft recommendations for Employees’ Future Benefits in Chapter The release of new CICA Handbook Sectionsent to subscribers in March,significantly changes the accounting for and reporting of employee future benefits in Canada.
Those that grant unrestricted time off for past service are classified as service-related future benefits, with the liability and expense accrued over the service period. As it now stands, the new income tax standards are effective for fiscal years beginning inand the revisions to the pensions and new pronouncements for other benefits won’t be finalized by the Accounting Standards Board until later in with a likely effective date of Those that require research or public service to be performed to benefit the entity during the sabbatical period do not require accrual.
New Section permits either prospective or retroactive treatment for the new recommendations, but requires that the same basis be applied by a company to all benefit plans for which a change in accounting is required.
Major assumptions underlying various measurements such as the discount rate, the expected long-term rate of return on plan assets, the rate of compensation increase, and information about the ckca health care cost trend rates for health care benefits. Because companies have a choice, the guidance to disclose the policy adopted in determining the composition of cash and cash equivalents has been elevated to a required disclosure.
Section includes more detail and discussion on entities with two or more plans, not discussed in Chapter civa More discussion about the treatment of sabbaticals. These are legitimate questions for professors to ask and ones that civa authors had to deal with in determining some of the content of the 5th edition!
Is this what I should be teaching my students?