In examining the costs of pension plans, Leah Hutcherson, public accountant, encounters certain terms. The components of

Question:

In examining the costs of pension plans, Leah Hutcherson, public accountant, encounters certain terms. The components of pension costs that the terms represent must be dealt with appropriately if IFRS is to be reflected in the of entities with pension plans.

Instructions
(a) (1) Discuss the theoretical justification for accrual recognition of pension costs.
(2) Discuss the relative objectivity of the measurement process of accrual versus cash (pay-as-you-go) accounting for annual pension costs.
(b) Explain the following terms as they apply to accounting for pension plans.
(1) Fair value of pension assets.
(2) Defined benefit obligation.
(3) Corridor approach.
(c) What information should be disclosed about a company’s pension plans in its and its notes?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...