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General Accounting questionss

Please help answer the following and provide references:

1. Can anyone explain why pension accounting is totally at the whim of the corporation? Given that they are free to select their anticipated growth on investment, it seems this figure could be jockeyed to suit the balance sheet.

2. I would like to have more clarification on the two formats of an income statement. Are there certain situations that would make it beneficial to use one format versus the other? Does one format contain more detailed information than the other? Does one format contain more general information than the other? I feel that further clarification on these formats would benefit the class.

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1. Can anyone explain why pension accounting is totally at the whim of the corporation? Given that they are free to select their anticipated growth on investment, it seems this figure could be jockeyed to suit the balance sheet.

Firms can use pension accounting to estimate their pension funds' average annual return over time, and report that amount as income, regardless of actual results. Corporations should estimate future pension obligations to determine the necessary contributions. In order to determine whether a plan is over funded or underfunded, firms need to forecast expected rates of returns on the pension fund assets, future salary levels and the discount rate used to compare the present value of future obligations to the current pension plan amount. Since all of these variables are subject to management's judgment, pension accounting can affect reported ...

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2. I would like to have more clarification on the two formats of an income statement. Are there certain situations that would make it beneficial to use one format versus the other? Does one format contain more detailed information than the other? Does one format contain more general information than the other? I feel that further clarification on these formats would benefit the class.

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