Edited by Erlinda J.

Hipolito
 Employee benefits include

1. Postemployment benefits- Pensions

2. short-term employee benefits-
Chapter 19
3. other long-term employee benefit-
Chapter 19
4. Termination Benefits
 Other Terms and Definitions

1. Contributory plan- employee and

employer contributes
2. Noncontributory plan-employer
contributes
3. Funded Plan- set funds in the future
4. Unfunded Plan- no separate fund
 Defined contribution plan
- entity pays fixed contribution into separate
entity known as the fund
- contribution is definite but the benefit is
indefinite
- usual entry:
Dr. Employee benefit expense
Cr. Cash
See page 570 and 571
 Defined Benefit Plan
- is complex because it uses actuarial
assumptions
- obligation measured on a discounted basis
- may be unfunded, fully funded or partly
funded by the contributions of the entity
- the “Expense” recognized is not necessarily
the amount of contribution for the period
 Components of Defined Benefit
Cost- (page 572)
1. Service Cost
a. Current service cost-- page 576

b. Past service cost- page 578

c. any gain or loss on settlement-page 611

1. Net Interest -page 576

a. interest expense on defined benefit

obligation (PBO beg x discount rate)

b. interest income on plant assets (FVPA beg

x discount rate)
c. interest expense on effect of asset ceiling

next
 Continue on Components of
Defined Benefit Cost- (page 572)

3. Remeasurements which comprise:

a. remeasurement of plan assets-
page 581
b. remeasurement of projected
benefit obligation - page 589
c. remeasurement of the effect of
asset ceiling- page 617