The pension disclosure for Zarle, prepared under U.S. GAAP is as follows. ZARLE COMPANY NOTES TO THE

Question:

The pension disclosure for Zarle, prepared under U.S. is as follows.
ZARLE COMPANY
NOTES TO THE FINANCIAL STATEMENTS
Note D. The company has a pension plan covering substantially all of its employees. The plan is non-contributory and provides pension benefits that are based on the employee's compensation during the three years immediately preceding retirement. The pension plan's assets consist of cash, shares, and bonds. The company's funding policy is consistent with the relevant government (ERISA) and tax regulations.
Pension expense for 2020 is comprised of the following components of pension cost.

$16,000 Service cost Interest on projected benefit obligation 26,500 Expected return on plan assets (15,960) Amortizatio

The estimated net actuarial loss and prior service cost for the defined benefit pension plan that will be amortized from accumulated other comprehensive into pension expense over the next year are estimated to be the same as this year.
The amount recognized as a non-current liability in the statement of financial position is as follows:

Non-current Iliability Pension liability $98,900 The amounts recognized in accumulated other comprehensive income relate

The weighted-average discount rate used in determining the 2020 projected benefit obligation was 10 percent. The rate of increase in future compensation levels used in computing the 2020 projected benefit obligation was 4.5 percent. The weighted-average expected long-term rate of return on the plan's assets was 10 percent.
Instructions
a. Use the information on Zarle to respond to the following requirements.
b. What are the key differences in accounting for pensions under U.S. GAAP and IFRS?
c. Briefly explain how differences in U.S. GAAP and IFRS for pensions would affect the amounts reported in the financial statements.
d. In light of the differences identified in (b), would Zarle's income and equity be higher or lower under U.S. GAAP compared to IFRS standards? Explain.

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