Premium Essay

Acc541 - Retirement Plans

In: Business and Management

Submitted By jnapier77
Words 1086
Pages 5
The acquisition of 100% of another company has resulted in research pertaining to pension plans and segments. Such research has focused on the reporting of defined contribution and benefit plans, and other post-retirement plans offered by the acquired company. In addition, research pertaining to eliminating two segments has been analyzed. Research that adheres to both the Financial Accounting Standards Board (FASB) and the generally accepted accounting principles (GAAP) guidelines has been assessed. As a result, recording guidelines for pension plans, and the process of eliminating segments within accounting, have been provided for further consideration by the company.
Defined Contributions Plans
Defined contributions plans require the company to allocate funds to employee retirement plans. The contribution amount for each employee who partakes in this type of retirement plan is dependent on the plan requirements; however, “after a minimum vesting period, the funds become the property of the employee for their benefit once they enter retirement” (Walther, 2010, p. 162). The ASC 715-70-20 (IAS 19) recognize this type of plan as means for a company to provide benefits to an employee and the inclusion of the defined contribution plan within the company financial statements is relatively simple (FASB, 2009). The company contribution is recorded as a pension expense within the company income statement. The pension expense, once calculated, is a fixed figure, which is determined by calculating a specified percentage of each employee’s salary, for example, a plan may require the employer to contribute 8% of an employee’s gross salary. The company is required to disclose within the financial statements that a plan is in place, the method for determining the company’s contribution, and the number of employee’s currently enrolled in the retirement plan (Schroeder, Clark,

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