C H A P T E R   20
                    C H A P T E R   20
        ACCOUNTING FOR PENSIONS AND 
         ACCOUNTING FOR PENSIONS AND 
            POSTRETIREMENT BENEFITS
            POSTRETIREMENT BENEFITS
                   Intermediate Accounting
                          IFRS Edition
                     Kieso, Weygandt, and 
                           Warfield 
   20-2
                                   Learning Objectives
                                    Learning Objectives
                                    Learning Objectives
                                     Learning Objectives
       1.     Distinguish between accounting for the employer’s pension plan and 
              accounting for the pension fund.
       2.     Identify types of pension plans and their characteristics.
       3.     Explain alternative measures for valuing the pension obligation.
       4.     List the components of pension expense.
       5.     Use a worksheet for employer’s pension plan entries.
       6.     Describe the amortization of past service costs.
       7.     Explain the accounting for unexpected gains and losses.
       8.     Explain the corridor approach to amortizing gains and losses.
       9.     Describe the requirements for reporting pension plans in financial 
              statements.
       10.    Explain special issues related to postretirement benefit plans.
    20-3
   Accounting for Pensions and Postretirement Benefits
   Accounting for Pensions and Postretirement Benefits
   Accounting for Pensions and Postretirement Benefits
    Accounting for Pensions and Postretirement Benefits
       Nature of Pension     Accounting for      Using a Pension     Reporting Pension 
             Plans              Pensions            Worksheet         Plans in Financial 
                                                                         Statements
        Defined              Alternative          2011 entries and     Within the 
        contribution plan    measures of          worksheet            financial 
        Defined-benefit      liability            Amortization of      statements
        plan                 Components of        past service cost    Within the notes 
        Role of actuaries    pension expense      2012 entries and     to the financial 
                                                  worksheet            statements
                                                  Gain or loss         2013 entries and 
                                                  2013 entries and     worksheet—a 
                                                  worksheet            comprehensive 
                                                  Recognition of       example
                                                  actuarial gains      Special issues
                                                  and losses
    20-4
                    Nature of Pension Plans
                    Nature of Pension Plans
                     Nature of Pension Plans
                     Nature of Pension Plans
     An arrangement whereby an employer provides benefits to employees 
     after they retire for services they provided while they were working.
                                                        Pension Plan
                                                         Pension Plan
                                                        Administrator
                                                         Administrator
               Employer           Contributions
                Employer
       Retired 
      Employees                      Benefit Payments     Assets & 
                                                          Liabilities
   20-5                     LO 1  Distinguish between accounting for the employer’s 
                                 pension plan and accounting for the pension fund.
                    Nature of Pension Plans
                    Nature of Pension Plans
                     Nature of Pension Plans
                     Nature of Pension Plans
        Pension plans can be:
          Contributory: employees voluntarily make payments 
             to increase their benefits.
          Noncontributory: employer bears the entire cost.
          Qualified pension plans: offer tax benefits.
        Pension fund should be a separate legal and accounting 
        entity.
   20-6                     LO 1  Distinguish between accounting for the employer’s 
                                 pension plan and accounting for the pension fund.