For Gap, Inc., examine and analyze the company's financial statements and pension and other postretirement benefit plans footnote. Based on your analysis, create a report, that includes answer to the following questions:
1 - What is the difference between pension and postretirement benefits?
2 - What type of pension and other postretirement benefit plans the company offers to its employees?
3 - What are the reporting requirements for pension plans in the financial statements?
4 - What is the funded or unfunded status of pension benefits and other retiree benefits for the most recent fiscal year?
5 - What are the assumptions made to calculate pension benefits and other retiree benefits?
6 - If the company has assets in Level 1, Level 2, and Level 3 categories, in which category are the majority of assets concentrated?
Support your responses with appropriate reasoning and examples.
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Pension refers to a contract for a fixed sum to be paid regularly to a person after retirement from service. Some of the pension plans include defined benefit plans, and defined contribution plans. Post retirement benefits are also paid to the employee during the post retirement period. Some of the Post retirement benefits include life insurance plans and medical plans. A pension is a retirement account that the employer maintains to give the employee a fixed payout when she retires. Post retirement benefits also include non-cash payment benefits given to the employees including dental, vision care, legal services, and tuition credits. The recording of pension benefits is governed by FASB statements 35, 87, 88, 106, 132 (R ) and 158. For example, statement 87 retains past pension accounting of delaying recognition of certain events, reporting net cost, and offsetting liability and assets. This statement requires a standard method for measuring net periodic pension cost, requires immediate recognition of liability when benefit obligation exceeds the fair value of plan assets, and requires expanded disclosures that provide more complete and current information (Cathy Beaudoin, Nandini Chandar, Edward M. Werner, 2010).
Gap Inc. offers defined contribution retirement plans, the GapShare 401(k) Plan and GapShare Puerto Rico Plan which are available to employees who meet the ...
Pension accounting is discussed step-by-step in this solution. The response also has the sources used.