What are the future benefits companies derive from these ...
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What are the future benefits companies derive from these costs?
Actual return on plan assets is the earned amount on the return by the accumulated pension fund assets in a particular year that is relevant in measuring the net cost that goes to the employer for contributing to the employees' pension plan. Amortization of unrecognized prior service cost happens because company's grant plan amendments with the expectation that they will receive economic benefits in future periods by allocating the cost of the benefits to the pension expense in the future. The component gain or loss happens because the market is constantly changing and because of the changes a company may either gain or loss depending on the amount of their actual return versus the expected return.
The interest rate is determined by calculating the interest for the period on the outstanding projected benefit obligation during the period. The reason prior service cost is amortized is because most company's don't provide credit for past years of service unless they are expecting benefits in the future.
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What are the future benefits companies derive from these costs?
Actual return on plan assets is the earned amount on the return by the accumulated pension fund assets in a particular year that is relevant in measuring the net cost that goes to the employer for contributing to the employees' pension plan. Amortization of unrecognized prior service cost happens because company's grant plan amendments with the expectation that they will receive economic benefits in future periods by allocating the cost of the benefits to the pension expense in the future. The component gain or loss happens because the market is constantly changing and because of the changes a company may either gain or loss depending on the amount of their actual return versus the expected return.
The interest rate is determined by calculating the interest for the period on the outstanding projected benefit obligation during the period. The reason prior service cost is amortized is because most company's don't provide credit for past years of service unless they are expecting benefits in the future.
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The future benefits specifically have to do with the past service cost component of pension plan expenses. The theory is that when there is a plan amendment, the cost of the amendment is offset by amortization over the future years and not recognized in it's entirety in the current year. The reason is because the employer will realize future economic benefits -- in ...
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